2003 (4) TMI 36

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.... order dated March 13, 1995, passed by the Tribunal under section 256(1) of the Income-tax Act, 1961, the following three questions have been referred for our opinion arising during the assessment year 1978-79. This reference is at the instance of the Department. Question No. 1: "Whether the Tribunal was right in holding that the club membership fees paid to the employees of Citibank did not....

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....n referred to us was ambiguous. The question is in two parts. The first part of the question is: "Whether the Tribunal was right in holding that for the purpose of disallowance under section 40A(5), the word 'salary' included encashment of unavailed leave?" It is argued on behalf of the assessee that section 40A(5) refers to disallowance in the hands of an employer. It was submitted that sec....

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....ing was to be calculated with reference to the period covered by the previous year. That including such payment in section 40A(5) would make it impossible to calculate the ceiling prescribed in that section and, therefore, such payments cannot be considered as forming part of the expenditure covered by section 40A(5). We do not find any merit in this argument. Section 40A(5), inter alia, states th....

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....efinition. It includes within its purview, profits in lieu of or in addition to any salary or wages. The expression "profits in lieu of salary" is also defined in an inclusive manner in section 17(3) of the Act and it includes within its purview, any payment due to or received by an assessee from his employer. In the circumstances, we hold that the word "salary" in section 40A(5)(a)(i) would cover....