Nil salary can satisfy the salary-threshold proviso, keeping foreign technicians' perquisites outside the disallowance rule.

Perquisites given to foreign technicians were examined against the disallowance rules in section 40(c)(iii) and section 40(a)(v) of the Income-tax Act, 1961. The provisos were read as applying where income chargeable under the head "Salaries" does not exceed the prescribed limit, and a nil salary was treated as falling within the expression "seven thousand five hundred rupees or less". Applying a uniform construction approach, the Court accepted that no rational basis existed to exclude nil-charge cases. On that reading, the perquisites were outside the disallowance provisions and the deletion of disallowance was upheld in favour of the assessee.

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Issues: Whether the perquisites provided to foreign technicians, whose salary was exempt from tax and therefore nil under the head "Salaries", fell within the disallowance provisions of section 40(c)(iii) or section 40(a)(v) of the Income-tax Act, 1961.

Analysis: The provisos to section 40(c)(iii) and section 40(a)(v) deny the disallowance only where the employee's income chargeable under the head "Salaries" exceeds the prescribed threshold. The Court adopted the view that the expression "seven thousand five hundred rupees or less" includes a nil amount, as there is no rational basis to exclude cases where no amount is chargeable under that head. Following the principle of uniform construction previously accepted in analogous decisions, salary which is nil for the purpose of the proviso satisfies the condition for its application.

Conclusion: The perquisites paid to the foreign technicians were not covered by section 40(c)(iii) or section 40(a)(v) of the Income-tax Act, 1961, and the disallowance was rightly deleted, in favour of the assessee.

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