Employment-related receipts taxable unless exempt; allowances, leave encashment, rent claim, professional tax, and parking compensation were all denied relief.

Amounts received by an employee by virtue of employment were treated as taxable unless a specific exemption applied. Dearness allowance and city compensatory allowance were regarded as salary, and leave encashment as profits in lieu of salary. House rent allowance was not shown to qualify for exemption under section 10(13A) because the claimed payments were not rent to a landlord for residential accommodation. Professional tax was not allowed as a deduction in computing salary income. Compensation for permitting use of a parking space was treated as income from other sources. Revenue's position was therefore upheld on all substantive issues discussed.

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Issues: (i) Whether dearness allowance, city compensatory allowance, and leave encashment received in the course of employment were taxable as salary or profits in lieu of salary; (ii) whether house rent allowance was exempt under section 10(13A); (iii) whether professional tax was deductible in computing salary income; and (iv) whether compensation for use of a parking lot was taxable.

Issue (i): Whether dearness allowance, city compensatory allowance, and leave encashment received in the course of employment were taxable as salary or profits in lieu of salary.

Analysis: Amounts received by virtue of employment from a definite source fall within the charging provisions unless expressly exempted. Dearness allowance was treated as part of salary because it is paid as recompense for services and is not a reimbursement of specific expenditure. City compensatory allowance, being granted with reference to the place of posting and not any exempt purpose, was held taxable. Leave encashment was held to be exigible to tax as profits in lieu of salary, and the later statutory insertion was treated as clarificatory.

Conclusion: These receipts were held taxable and the claim for exemption failed, in favour of Revenue.

Issue (ii): Whether house rent allowance was exempt under section 10(13A).

Analysis: The exemption under section 10(13A) applies only where the assessee actually incurs expenditure on rent for residential accommodation. A member of a co-operative housing society allotted a flat is deemed to be the owner under the Act for the relevant purpose, and payments towards society charges and common outgoings are not rent paid to a landlord. The allowance was therefore not shown to be covered by the exemption.

Conclusion: House rent allowance was held not exempt under section 10(13A), in favour of Revenue.

Issue (iii): Whether professional tax was deductible in computing salary income.

Analysis: Deduction from salary income is confined to amounts expressly allowed by the Act. Professional tax was not treated as an admissible deduction on the facts and in the statutory scheme governing salary computation.

Conclusion: The claim for deduction was rejected, in favour of Revenue.

Issue (iv): Whether compensation for use of a parking lot was taxable.

Analysis: The amount was received at a fixed rate for allowing use of the parking space and was not shown to fall within any exemption. It was therefore assessable as income from other sources.

Conclusion: The compensation was held taxable, in favour of Revenue.

Final Conclusion: The departmental appeals succeeded and the assessee's cross-objections failed, leaving the Revenue's position upheld on all substantial issues decided.

Ratio Decidendi: Allowances and receipts arising from employment are taxable unless a specific exemption applies, and an assessee must bring the receipt clearly within the statutory exemption or deduction claimed.

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