TaxTMI 
TaxTMI 
1977 (1) TMI 69
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....ut the allowable perquisite to the extent of 20 per cent of salary, took the salary alone into account and not the bonous and other allowances paid to the employees. 3. When the matter was taken on appeal, the Appellate Assistant Commissioner considered the issue in detail and the operative part of his order reads as under: "9. Summing up: The Income Tax Officer is directed to recompute the permissible allowance taking bonus as part of the salary, dearness allowance to be taken if it has to be treated as part of salary as per terms of employment, city and city compensatory allowances not to be taken as perquisite for purpose of disallowance (need not also be taken as part of salary for restricting to the extent of 20%), taking that pa....
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.... the Madras High Court in the case of Commissioner of Income Tax, Madras vs. India Radiators Ltd(1). Wherein it has been held that bonus is part of salary. 6. The learned Departmental Representative, on the other hand, contended that what is contemplated under s. 40 (c)(iii)/40 (a)(v) of the Act is that a part of the perquisite or benefits or amenities accruing to the employees will have to be disallowed. It was submitted that payment of bonus, dearness Allowance, city allowance, house rent allowance and entertainment allowance gave a positive benefit or amenity to the employees and as such the directions given by the Appellate Assistant Commissioner to re-work the perquisites allowable cannot be sustained. In the circumstances, it was s....
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....ause (5) of s. 10 or passage moneys or the value of any free or concessional passage referred to in sub-clause (i) or any payment of tax referred to in sub-clause (iii) of clause (6) of that section or any sum referred to in clause (iii) of sub-section (1) of s. 17 or in clause (v) of sub-s.(2) of that section of the amount of any compensation referred to in clause (ii) of sub-s. (3) of that section or any payment referred to in clause (iv) or clause (v) or any expenditure referred to in clause (ix) of sub-s. (1) of section 36 shall not be taken into account." Sri Swamy, the learned counsel appeared on behalf of the assessee has submitted that what is to be disallowed in terms of the above clause (iii) is only any benefit or amenity whic....
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....d by the learned Departmental Representative that any contrary view has been taken by any other Benches. In the circumstances, we see no reason to differ from the view taken by the Benches that sub-clause (iii) of clause (c) of s. 40 of the Act does not cover cash payment. The words on which stress is laid by the learned counsel on behalf of the assessee to point out that only benefits in kind are to be included therein and that it does not contemplate inclusion of cash payment. Sri Swamy also gave one reason and we think that reason has some bearing as to why sub-clause (iii) contemplates only disallowance of benefits in cash. The reason is that all payments in cash are to be taken into account while assessing the salary income of the empl....