Tribunal Allows Separate Deductions for Income from Different Employments under 'Salaries' Head

The Tribunal held that deductions should be allowed separately for income from different employments under the head 'Salaries.' The Tribunal rejected the Income Tax Officer's contention that only one consolidated deduction is admissible, emphasizing that each item enumerated in Section 17(1) represents salary. Drawing an analogy to computing income under the head 'profits and gains of the business,' the Tribunal upheld the Commissioner's order, affirming the separate computation of income for different employments. The Tribunal dismissed the department's appeal and affirmed the decision to allow deductions separately for income from different employments under the head 'Salaries.'

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Issues:
Quantum of standard deduction admissible to the assessee in computing income under the head 'Salaries'.

Analysis:
The dispute in this appeal revolves around the quantum of standard deduction admissible to the assessee in computing his income under the head 'Salaries' for the assessment year 1978-79. The assessee, who held the position of Managing Director in two companies, received remuneration from each company. One company provided him with a car, while the other did not provide any conveyance. The assessee claimed a standard deduction of Rs. 1,000 against the salary income from the company providing the car and Rs. 3,500 from the other company, totaling Rs. 4,500. However, the Income Tax Officer (ITO) restricted the deduction to Rs. 1,000, contending that only one consolidated deduction is admissible as the income is chargeable under the head 'Salaries' from different employments.

The Central Board of Direct Taxes (CBDT) representative argued that as the income from salary is under the head 'Salaries,' there should be only one deduction aggregating all salaries derived by the assessee from different employments. The representative referred to a Bombay Bench Tribunal order that supported the assessee's stance. The CBDT representative emphasized that the term 'salaries' includes income from different employments to be aggregated for deductions under Section 16. However, the Tribunal rejected this argument, stating that 'salaries' being a plural of 'salary' does not support the department's contention. Sections 14, 15, and 17 define 'salary' and its components, indicating that each item enumerated in Section 17(1) represents salary. The Tribunal agreed with the Commissioner of Income Tax (Appeals) that deductions should be allowed separately for income from different employments under the head 'Salaries.'

The Tribunal concluded that the definition of 'salary' under Section 17 should not aggregate all items but allow deductions for each source of income chargeable under 'Salaries.' Drawing an analogy to computing income under the head 'profits and gains of the business,' the Tribunal upheld the Commissioner's order, emphasizing the separate computation of income for different employments. Ultimately, the Tribunal dismissed the department's appeal, affirming the Commissioner's decision to allow deductions separately for income from different employments under the head 'Salaries.'

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