Law:

Section:

Section 10(13A), read with section 17, of the Income-tax Act, 1961 and rule 2A of the Income-tax Rules, 1962 – House rent allowance – Assessment years 1966-67 and 1967-68 – Assessee was branch manager of certain company – Assessing Officer held that assessee who received commission in lieu of salary, was not entitled to exemption under section 10(13A) in respect of house rent allowance received in assessment years in question – Whether since rule 2A specifically stipulates that expression 'salary' shall have meaning assigned to it in rule 2(h) of Part A of Fourth Schedule to Act, which excludes from 'salary' 'all other allowances and perquisites' except any dearness allowances, assessee was not entitled to relief under section 10(13A), read with rule 2A, in respect of house rent allowance received - Held, yes FACTS The assessee was a branch manager of certain company. During the assessment years under consideration, the assessee received commission in lieu of salary. He had also received house-rent allowance in each of the two years under consideration. The ITO held that the assessee was not entitled to any exemption under section 10(13A) in respect of the house-rent allowance received by him from the company and included the same in the respective assessments for the two years. The AAC found that the rules prescribed in the Act defined the term 'salary' and, therefore, the definition of 'salary', under section 17 did not hold the field. Accordingly, he held that rule 2A of the Income-tax Rules, 1962, would be applicable. The AAC also considered that the term 'salary' did not include any sum in the nature of commission, which could be determined only after the accounting year of the employer. He further found that the assessee was not entitled under the agreement to any minimum commission. Accordingly, he held that the assessee was not entitled to any deduction under section 10(13A) and dismissed the appeals. The Tribunal held that in view of section 17 giving a wider definition to the term 'salary' the same should be read along with the special definition of the term 'salary' as given in the different rules for the purposes of special exemption. In the view of…

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