1998 (2) TMI 16

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....loyed by the American Madura Mission of the United Church Board for World Ministries and who had served at the Christian Medical College Hospital at Vellore had been granted tax-free income by her employers. The assessee was a national of the United States and a nurse by profession. She had filed returns for the years 1974-78 showing the income of Rs. 34,653 for the assessment year 1974-75, Rs. 40,508 for the assessment year 1975-76, Rs. 67,741 for the assessment year 1976-77 and Rs. 48,035 for the assessment year 1977-78. At the time of filing the return, the amount of tax payable on the income aforementioned is, viz., Rs. 9,574, Rs. 12,082, Rs. 17,450 and Rs. 19,883, were shown as income-tax allowance. There was no written contract betwee....

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....loyer to an allowance paid to an employee does not by itself determine or necessarily lead one to the conclusion that the salary paid was a tax-free salary. The assessee herein had been paid the salary and in addition to that, an allowance was given termed as "income-tax allowance". The assessee was not given the right to claim any further amount from the employer on account of having to pay amounts as tax in excess of the amount of the allowance. The allowance was given towards payment of income-tax. The allowance so given therefore, did not result in her salary becoming a tax-free salary. The assessee had offered that amount of allowance also to tax and her total salary was therefore required to be regarded as the salary as reported by he....