TaxTMI 
TaxTMI 
2009 (7) TMI 914
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....n purposes." 2. The Assessing Officer noticed that while computing the perquisite value in respect of accommodation provided to the employees, the dearness allowance has not been considered as part of salary. He also noted that the CAO of the employer assessee stated that dearness allowance formed a part of salary for the calculation of retirement benefits like gratuity and leave encashment but not for the pension purposes so far, however, from the current financial year, the dearness allowance is also included in salary for calculation of pension. 3. Citing rule 3 of the Income-tax Rules, 1962 and definition of 'salary' given therein the Assessing Officer observed that for valuation of perquisites, the dearness allowance will form part of salary if it is taken into computation of retirement benefits. He observed that since retirement benefits are not defined under the Income-tax Act, 1961 and are also not specifically mentioned as far as definition of 'salary' is concerned for the purpose of rule 3 of the Income-tax Rules, 1962, it can safely be held that the words 'retirement benefits' for the purpose of rule 3, would mean anyone or all the benefits given to an employee at the ....
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...., recoverable) in respect of accommodation allotted to the employees by appellant-company/corporation, would be of no meaning, as the accommodation whatsoever allotted is provided to the employee from the Corporation and not the State Government. The case law relied on by counsel/AR is not of any help to the appellant as these relate to period prior to 1-4-2001 since when amendment rule 3 come into effect. 2. As to the inclusion of whole of DA for the purpose of salary he held that as per the order dated 20-5-2004, issued from the Financial Adviser (HQ), DHBVNL, dearness allowance equal to 50 per cent of the existing basic pay got merged with the basic pay with effect from 1-4-2004 and is to be counted for the purposes like payment of allowances, transfer grant, retirement benefits, contribution to GPF, license fee, various advances, etc. In other words, 50 per cent of the DA shall be one which shall enter into computation of superannuation and retirement of the employee concern. The abovesaid order takes effect from 1-4-2004 unless there were employees who were retiring on or before 31-3-2004, 50 per cent of DA so merged shall form part of salary, for the purpose of Explanation (....
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....erusing all concerned notifications and scheme of the Government discussed in the body of the appeal order and in view of such a factual finding, there is no basis for revenue to remain aggrieved merely on the basis of some statement given by some employee during the course of survey that Dearness Allowance is not taken into account for the purpose of pension, more so when in that very statement it was admitted by that very employee as recorded in the impugned orders that Dearness Allowance is taken into account for the purpose of gratuity. 8. In the statement of CFO reply to question No. 12, CFO has clearly mentioned that DA is not included for the purpose of pension and DP (dearness pay) is included for the purpose of pension only from 1-4-2004. It means that pension which is the most important retirement benefit does not include DA and that being so DA is not to be included in salary in terms of rule 3 also, for the purpose of calculation of the valuation of the perquisite. The term "retirement benefit" has not been defined under the Income-tax Act. It has to be taken then that in any case, there was a bona fide estimate on the part of the assessee and that is why valuation was....
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....s as per 1991 census; and 7.5 per cent of salary in other cities vide category 2 of Table I below rule 3(1). The fact that the fixed rent has been allotted (i.e., recoverable) in respect of accommodation allotted to the employees by assessee-company/corporation, has no bearing on the issue as the allotted accommodation is provided to the employee by the Corporation and not the State Government. 12. For the purpose of rule 3 of Income-tax Rules, 1962 governing the valuation of perquisites, the term 'salary' includes the pay, allowance, bonus of commission payable monthly or otherwise or any monetary payment, by whatever name called from one or more employers, as the case may be, but does not include the following, namely- (a)Dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned; (b)Employer's contribution to the provident fund account of the employee; (c)Allowances which are exempted from payment of tax; (d)The value of perquisites specified in clause (2) of section 17 of the Income-tax Act; (e)Any payment or expenditure specifically excluded under proviso to sub-clause (iii) of clause (2) of....