Inclusive salary definition brings employer-paid income-tax into rent-free accommodation valuation for employees.

The valuation rule for rent-free accommodation was construed to use "salary" in an inclusive sense, not a restrictive one. Because the Act already treats salary as including perquisites and profits in lieu of salary, income-tax borne by the employer on an employee's behalf was treated as part of the employee's remuneration in substance. It therefore fell within salary, pay or allowance for computing the value of rent-free residential accommodation, and the issue was answered in favour of the Revenue.

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Issues: Whether income-tax borne by the employer on behalf of an employee is to be treated as salary for the purpose of valuing rent-free accommodation under the applicable rules.

Analysis: The expression "salary" in the valuation rule was held to be an inclusive definition and not a restrictive one. The rule was construed in the context of the Act, where salary already included perquisites and profits in lieu of salary. The payment of tax by the employer was treated as part of the employee's remuneration in substance, and therefore as falling within salary, pay, or allowance for the purpose of computing the value of rent-free residential accommodation.

Conclusion: Income-tax borne by the employer is includible in salary for valuing rent-free accommodation, and the question was answered in the affirmative in favour of the Revenue.

Ratio Decidendi: Where a valuation rule uses "salary" in an inclusive sense, amounts paid by the employer towards the employee's income-tax form part of salary for computing the value of rent-free accommodation.

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