Employer-paid commission taxable as salary; related expenses not deductible once commission falls within salary income.

Commission paid by an employer with reference to sales volume was treated as an integral part of employee remuneration and therefore fell within the inclusive definition of salary under section 17(1) of the Income-tax Act, 1961. Once the commission was taxable as salary income, expenses said to have been incurred to earn that commission, including canvassing, travel, telephone, postage and car depreciation, were not deductible from that head of income. The issue was decided in favour of the Revenue and against the assessee.

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Issues: Whether commission received by an employee from the employer, over and above regular salary, forms part of salary income and whether expenses allegedly incurred to earn such commission can be deducted from that income.

Analysis: Commission paid by the employer with reference to sales volume was an integral part of the remuneration for services rendered by the employee. Section 17(1) of the Income-tax Act, 1961 contains an inclusive definition of salary and specifically takes within it commission paid in addition to salary or wages. Once the commission is taxable under the head salary, the claim that expenses such as canvassing, travelling, telephone, postage and depreciation on car should be deducted from it does not arise.

Conclusion: The commission formed part of salary income, and no deduction for the claimed expenses was allowable. The issue was answered in favour of the Revenue and against the assessee.

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