Recurring life allowance for past services treated as taxable income within the inclusive definition of salary.

A recurring life allowance paid in consideration of long services rendered was treated as taxable income, not a capital sum or windfall. The payment was held to fall within the statutory concept of income and, more specifically, the inclusive definition of salary, which extends to annuity, pension, gratuity, fees, commissions, perquisites, or profits in lieu of or in addition to salary or wages. As no applicable exemption was shown, the monthly allowance was assessable to income tax.

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Issues: Whether a monthly allowance payable for life, and for the balance of five years to the assessee's son on the assessee's death, was taxable income under the Income-tax Act.

Analysis: The allowance was not a mere capital sum or windfall. It was paid in consideration of long services rendered in building up the payer's business and was structured as a recurring monetary benefit arising from the covenant between the parties. The payment fell within the statutory conception of income and, in particular, within the inclusive definition of salary, which covers annuity, pension, gratuity, fees, commissions, perquisites or profits received in lieu of or in addition to salary or wages. No applicable exemption was shown.

Conclusion: The allowance of Rs. 500 per month was taxable income and liable to income tax.

Final Conclusion: The reference was answered against the assessee and in favour of the Revenue, holding the monthly allowance to be assessable.

Ratio Decidendi: A recurring payment made in consideration of services rendered, structured as a life allowance or annuity, is taxable income and may fall within the inclusive statutory concept of salary unless specifically exempted.

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