Law: Income Tax Act, 1922

Section: 10(4)(d)

(a) Income-tax Act (XI of 1922)-- --S. 10(4) (d), Explanation 1--Expression salary--Definition--Overtime paid to employee is included in the expression salary as defined in the Explanation. Strouds Judicial Dictionary, 1974 Edn. ref. (b) Income-tax Act (XI of 1922)--S. 10(4)(d), Explanation 1--Expression salary--Definition--Leave , encashment/leave salary would be deemed to be compensation for the services rendered by employee and thus included in the expression salary as defined in Explanation I of S.10(4)(d). Concise Oxford Dictionary and Blacks Law Dictionary, Fifth Edn. ref. Per Farhat Ali Khan (Chairman)-- (c) Income-tax Act (XI of 1922)-- ---S. 10(4)(d), Explanation I--Expression salary--Connotation-¬Overtime and leave salary both are included in expression salary in S.10(4)(d), Explanation. The word salary implies relationship of master and servant, which in its turn revolves around the terms and conditions of an employment agreement. It is always a condition of an employment that an employee has to render daily services for a certain period of time. It may be for 10 hours, 8 hours or 6 hours etc., etc. but at the same time an employer is entitled to get commitment from his employee that in case of certain contingencies he would render services beyond the agreed period of time. The employee, on the other hand, is entitled to compel his employer to pay for this extra time work at higher rate than what is paid during the normal hours of work. Such payment is called overtime allowance and, falls within the definition of remuneration. Similarly, in every employment agreement there is always a provision for a leave period. Certain rates of leave per month are agreed upon between the employer and employee and in addition to public holidays the agreed leave is also admissible to an employee. However, under certain circumstances the parties may stipulate that in case an employee gives up his leave entitlement, he would be paid certain amount for it which is called Leave Salary Allowance. The Leave Salary Allowance falls within the definition of compensation as given in Explanation I. However, it is to be specifically noted that generally neither overtime…

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