Law:

Section:

Section 15 of the Income-tax Act, 1961 - Salary - Chargeable as - Assessment year 1961-62 - There was contract between assessee and his employer for payment of monthly remuneration or share in profits, whichever was higher - Share in profit was determined only at end of accounting year - Amount received was being assessed as salary year after year - Assessee died during previous year - Employer worked out their profit for accounting year and determined remuneration to assessee on pro-rata basis - Whether amount determined on pro-rata basis accrued to assessee at time of his death and as such could be assessed as his salary income - Held, yes FACTS The assessee, 'VM', was an employee in the jewellery department of a company. It was an accepted position that remuneration was to be paid to 'VM' by the employers at Rs. 150 per month or a share in the profits of the jewellery department, whichever was higher. The accounts of the employer were closed each year on 30th June. It was then that the profits were ascertained and the share in the profits was paid to 'VM'. He was assessed from year to year in respect of his remuneration under the head 'Salary'. He died during the previous year relevant to assessment year in question. The employers worked out their profit in the jewellery department for the accounting year ending on 30-6-1961, and determined the remuneration to 'VM' on a pro rata basis. This share in the profits was credited to his account. The legal heir of the 'VM', filed a return of income and claimed that the said share in profits was a capital receipt and was not taxable as salary income of the deceased. The Tribunal upheld the contention that the right to receive the share of the profits did not accrue to the deceased during his lifetime and hence it could not be taxed as the salary income of the deceased. On reference : HELD Under section 15 income which is chargeable to tax under the head 'Salary' includes any salary due from an employer to an assessee in the previous year, whether paid or not. It also covers any salary which may be paid or may have accrued to him in the previous year though not due before it or became due to him, and it also covers…

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