Taxability of deferred annuity premium as salary-related benefit affirmed under expanded "profits in lieu of salary" scope.

An employer's payment of Rs. 36,000 for a deferred annuity policy for an employee's benefit was treated as taxable salary-related income, falling within the scope of "profits in lieu of salary" and a perquisite. The analysis turned on the breadth of salary-related income under the Income-tax Act, 1961 and the retrospective insertion of clauses (iiia) and (iiib) in section 2(24), which expanded the taxable character of such benefits. On that basis, the deferred annuity premium was held assessable in the employee's hands as a taxable employment benefit, and the issue was answered in favour of the Revenue.

---

---

Issues: Whether the amount of Rs. 36,000 utilised by the employer for purchase of a deferred annuity policy for the assessee's benefit was assessable as a profit in lieu of salary or perquisite in the hands of the assessee.

Analysis: The question turned on the scope of "profits in lieu of salary" and the effect of the retrospective insertion of clauses (iiia) and (iiib) in section 2(24) of the Income-tax Act, 1961. In light of the principles governing those insertions and the ambit of salary-related income, the amount paid by the company towards the deferred annuity policy was liable to be treated as taxable salary-related benefit.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

---