Employment income tax principle: a genuine housing indemnity under a separate contract was not treated as taxable remuneration.

A payment received by an employee under a separate housing agreement was not taxable as a profit or perquisite from employment under Schedule E. Taxability depended on whether the employment was the real source of the receipt, rather than merely the occasion for it. Here, the salary was fixed independently, the arrangement was a genuine bargain to support employee relocation and employer staffing policy, and the sum was referable to the employee's loss on resale under that contract. The payment was therefore not remuneration for services and was not assessable to income tax under Schedule E.

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Issues: Whether the sum paid under the housing agreement, by way of indemnity against loss on resale of a house, was a profit or perquisite arising from employment chargeable to income tax under Schedule E of the Income Tax Act, 1952.

Analysis: Taxability under Schedule E depended on whether the receipt arose from the office or employment, that is, whether the employment was the real source of the payment and not merely the occasion for it. The payment was made under a separate housing agreement, not as wages or salary, and the employee's salary was fixed independently of that arrangement. The agreement was a genuine bargain designed to assist employees required to move and to secure the employer's own staff policy objectives. The payment was therefore referable to the distinct contractual relationship under the housing agreement and the employee's personal loss on resale, rather than to remuneration for services.

Conclusion: The sum was not a taxable profit or perquisite from employment and was not assessable under Schedule E.

Final Conclusion: The appeal failed, and the assessment could not be sustained in respect of the housing indemnity payment.

Ratio Decidendi: A payment received by an employee under a genuine and distinct contractual arrangement is not chargeable under Schedule E unless the Crown shows that it was in substance remuneration for services and not merely a benefit incidentally connected with employment.

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