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Various juridical

pronouncement
relating to

S ALARIE S

C o u rte sy | m a n m o h a n . ko lka ta @ g m a ilco


. m
Salary is the recompense or
consideration given to a person
for the pains he has bestowed
upon another’s business
Convile vs. CIT (1935) 3 ITR
404
Courtesy | manmohan.kolkata@gmail.com
employee of the
Government, even though
he receives retainer fee
and his contract for service
depends on pleasure of the
Governor. Such retainer fee
shall be taxable under the
head “Profits and gains of
business or profession”.

CIT vs Govinda swaminathan


233 ITR 264 (Mad)
allowed to work in the paying
clinic run in the college at
some share of fee from such
clinic. Such share of fee
received by employee-doctors
shall be taxable as salary,
because the authority to work in
the clinic, fee of the clinic, share
of doctors, etc. were prescribed
by the employer.
CIT vs Dr. Mrs. Usha Verma (P&H-2002)
Amount of scholarship given
by employer –company to
children to its employee solely
at its discretion without
reference to terms of
employment is not assessable
as perquisites.
CIT vs. M.N. Nadkarni (1986) 161
ITR 544(BOM)
Remuneration received
by judges is taxable
under the head
“Salaries” even though
they are not having any
employer.
Justice Deoki Nandan Agarwal vs
Union of India, 237 ITR 872 (SC)
Remuneration received by
judges is taxable under the
head “Salaries” even though
they are not having any
employer.
Justice Deoki Nandan Agarwal vs
Union of India, 237 ITR 872 (SC)
Salary & Wages are
identical in the
Income-tax Act

Gestetner Duplicators (P.) ltd.


vs CIT [1979] 117 ITR 1 (SC)
Salary income
must be real and
not fictitious

Reade v. Brearley (1933) 17 TC-


687
Once salary has been
earned by an
employee, its
subsequent waiver
does not make it
exempt from tax
liability.
CIT vs. Gian Singh Kalasi (1980)
(Del)
provided rent free
accommodation by the
employer , he will be
chargeable to tax even
though he does not
utilize the
accommodation (at his
own will)
CIT vs. Bawa Singh Chauhan
(1984)150 ITR 8 (Delhi)
Any increment in salary
with retrospective effect
which have not been
taxed in the past, such
arrears will be taxed in
the year in which it is
allowed.
Sardar Arjun Singh Allhuwalia
vs CIT (1980) 124 ITR 347 (MP)
The reduction in salary of
an employee cannot be
effected with
retrospective effect. Such
reduction can operate
only prospectively.

Raghunathan (T.M.) vs CIT


(1998) 231 ITR 826 (Mad)
For computation of
salary, method of
accounting followed
by employee is
irrelevant.
CIT vs Thiagaraja Chetty & Co.
(1953) 24 ITR 525 (SC)
a Managing Director
retired and reappointed,
then it shall not be
treated as termination of
service for the purpose of
computation of gratuity
etc.
CIT vs Savitaben N Amin (Smt.)
(1986) 157 ITR 135 (Guj)
entertainment allowance
u/s 16 is permissible
even if the amount
received as
entertainment allowance
is not proved to have
been spent
CIT Vs. Kamal Devi [1971] 81
ITR 773 (Delhi).
The word completed years
of service appearing in sec.
10(10) should be interpreted
to mean the employees total
service including service
under former employer(s),
provided he was not paid
gratuity by the former
employer(s)
CIT vs P.M. Mehra (1993) 201
ITR 930 (Bom).
in Pakistan, migrated to India at
the time of partition. He suffered
loss of personal movable
property in Pakistan due to
partition. He applied to his
employer for compensating him
for such loss. Certain payments
were given to him as
compensation. It was held that
such payments should not be
taxed as ‘profit in lieu of salary’

- Lachman Dass Vs. CIT [1980]


124 ITR 706 (Delhi).
Pension received from
United Nations
Organisationis not taxable.
Further, pension received by
a widow of the United
Nations ex-officials from UN
Joint Staff Pension Fund is
also exempt.
CIT vs. Janaki Loganathan
(2002) 257 ITR 620 (Mad.)
Allowance means fixed
quantum of money given
regularly in addition to
salary to meet particular
requirement.

Mutual Acceptance Co. vs. FCT


(1944) 69 CLR 389
Compensatory allowance
received by judge under
Article 222(2) of the
Constitution is not taxable
since it is neither salary nor
perquisite

perquisite—Bishamber Dayal
Vs. CIT [1976] 103 ITR 813
(MP).
Perquisite may be
contractual or voluntary
perquisites .

CIT vs S.S.M. Lingappan (1981)


7Taxmann 71 (Mad.)
Only legally originated
benefit from employment
can be taxed as
perquisite. A benefit
derived by unauthorised
means shall not be
taxable.
CIT vs C. Kulandaivelu Konar
(1975) 100 ITR 629 (Mad.)
Fixed amount paid to
employees by way of
leave travel allowance
shall not be exempt u/s
10(5).
Dr. Reddy laboratories Ltd.
vs. ITO 58 ITD104
The legal
representative is not
liable for payment of
tax on income that has
not accrued to the
deceased till his death.
Arvind Bhogilal vs. CIT
(1976) 105 ITR 764 (Bom.)

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