Salary income threshold must be tested after standard deduction for deduction eligibility under the Income-tax Act.

For the second proviso to section 36(1)(iia) of the Income-tax Act, the employee's income chargeable under the head "Salaries" must be computed under the salary-computation provisions, including the standard deduction under section 16, before testing whether it exceeds the prescribed threshold. The analysis treats the expression used in the proviso as referring to computed salary income, not gross salary under section 15. On that basis, the standard deduction is relevant to determine whether the monetary limit is crossed, and the assessee is entitled to the deduction benefit under section 36(1)(iia).

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Issues: Whether, for applying the second proviso to section 36(1)(iia) of the Income-tax Act, 1961, the employee's income chargeable under the head 'Salaries' had to be computed after allowing the standard deduction under section 16, so as to determine whether it exceeded twenty thousand rupees.

Analysis: The proviso turns on the employee's income chargeable under the head 'Salaries'. Although section 15 is the charging provision for salary income, the actual determination of whether the income exceeds the monetary limit requires computation of that income. Section 16 expressly provides for computation of income chargeable under the head 'Salaries' after making deductions, and the same expression is used in the proviso. Therefore, the standard deduction must be taken into account while ascertaining whether the salary income crosses the prescribed threshold.

Conclusion: The standard deduction under section 16 is to be included in the computation, and the assessee was entitled to the benefit of section 36(1)(iia).

Ratio Decidendi: Where a proviso to a tax deduction provision uses the expression 'income chargeable under the head Salaries', the income must be computed in accordance with the salary-computation provisions, including the standard deduction, to test the statutory threshold.

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