1989 (7) TMI 163

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....entical and these appeals have been heard together, these are disposed of by a consolidated order for the sake of convenience. 2. The brief facts of the case may first be noted. The assessee is an employee of M/s. D.C.M. Chemical Works. The assessee was paid a reward of Rs. 25,000 by his employer for the year relevant to the assessment year 1980-81. For the years under appeal, the reward paid to the assessee was as follows : Assessment year Amount of reward Rs. 1981-82 25,000 1982-83 30,000 1983-84 1 lakh 1984-85 1 lakh 3. This reward was treated as salary by the Income-tax authorities and that matter is not in dispute before us. The only controversy before us is, whether such reward should be included in the definit....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....years, that reward should not be treated as part of the salary while computing the perquisite in respect of rent free accommodation. 5. We have carefully considered the submissions made by both the sides and perused the material on record. The first thing that strikes us is the fact that payment of reward is an annual feature in this case. The reward is also being paid in recognition of the assessee's "work towards betterment of operational results of DCM Chemical Works". In these circumstances, the test to be applied is, whether the assessee received the payment by virtue of his office or otherwise. The test is, whether from the standpoint of the person, who receives payment, it accrues to him by virtue of his office. If it does, it doe....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the meaning of 'salary' is given as follows : '1. To pay (as a person) for something done : Recompense, Reward. 2(a) To pay a salary to (a person) 2(b) To attach a salary to (a position).' In Black's Law Dictionary 'salary' is defined as a reward, to recompense for services performed (Emphasis supplied). According to these definitions also, the word "reward" is considered salary. 7. In this context, we may also refer to the observations of the Madras High Court in the case of CIT v. I.G. Mackintosh [1975] 99 ITR 419. The observations are as follows : "The purpose of defining the word 'salary' in Rule 3 of the IT Rules, 1962, separately appears to be to exclude certain items which would otherwise be comprehended within it rather tha....