Law: Income Tax Rules, 1922

Section: 39,39(3)(aa)

[Income Tax Rules--Rule 39(3)(aa)-Perquisites-Bonus-Rent-free accommodation-Determination of value of rent free accommodation at certain percentage of salary-Bonus received by assessee- Agreement between employer and assessee-employee not stipulating that bonus would from part of his salary-Whether bonus includible in salary for determining perquisites for rent free accommodation-Held no Notification No. S.R.O. 450(K)/67, dared 7-3-1967 A plain reading of S.R.O. 450(R)/67, dated 7-3-1967, issued by the Central Board of Revenue, clearly indicated that the payment of bonus or commission to a Director or employee shall from part of the salary if it is paid in accordance with the terms of his employment as remuneration or compensation for services. In the instant case it is, however, noted that there is no such clause in the agreement by and between the employer and the assessee appellant above-named which stipulated the payment of bonus to him as part of his salary. The department, it may further be noted, appears to have changed its stand inasmuch as after the decision of the Appellate Assistant Commissioner gated 22-10-1974 in the above noted appeal against the department on this issue it did not come up in the appeal before us. Moreover in the assessment year 1974-75 the assessing officer has himself excluded the amount of bonus for the purpose of determining perquisites for rent free accommodation. This position is admitted to be correct even by the learned Departmental Representative appearing before us. We also feel inclined to agree with the contention of the learned Authorised Representative of the appellant that the Fifth Bench of the Tribunal in its decision in ITA. No. 1814(KB) of 1973-74, dated 15-5-1975 does not appear to have given due consideration to the definition of the word "salary" as given in clause (aa) of sub-rule (3) Of Rule 39 of the Income Tax Rules as well as in the above noted Notification and We with utmost respect to our learned brothers, who decided the said case unfortunately find it difficult to agree with them. In our opinion simply because bonus has been mentioned as being part of the salary it does not thereby necessarily become…

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