1996 (11) TMI 55

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....he Income-tax Act, 1961 ?" The assessee is a company, the head office of which is at Kanpur. The assessee-company, during the previous year relevant for the assessment year 1968-69, appointed Sri Gundu Rao on monthly cash remuneration of Rs. 2,950 including personal, entertainment, servants and bungalow maintenance allowance, etc. Apart from cash remuneration, he was allowed certain perquisites as well. The total remuneration paid to Sri Rao came to Rs. 43,500, the details of which are given below : Rs. 1. Basic salary 12,000 2. Dearness allowance 6,000 3. Personal allowance 9,600 4. Entertainment allowance 2,400 5. Servants and bungalow maintenance allowance 5,400 6. Perquisites for car and house 8,100 ----------....

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....have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule. " Clause (h) of rule 2 of Part A of the Fourth Schedule defines the word "salary" thus : " 'salary' includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. " It is, therefore, clear from clause (iii) of section 40(c) that any expenditure incurred after February 29, 1964, by the assessee which results directly or indirectly in the provision of any benefit or amenity or perquisite will be disallowed to the extent such expenditure exceeds one-fifth of the amount of salary payable to an employee for any period of his employment after the aforesaid date. The contention of the assessee i....

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....meaning without importing into it any foreign words and without subtracting any words therefrom. The term "personal allowance" has not been defined in the Act anywhere. Taking the semantic view of the term "personal allowance", it cannot be said that that forms part of salary which under clause (h) of rule 2 of the Fourth Schedule includes only dearness allowance and not any other allowance. Personal allowance does not partake of the character of dearness allowance and that not being in the nature of dearness allowance, cannot be included in the salary. The Appellate Tribunal relying on a decision of this court in the case of Ronal Lloyed Powell v. Administrator-General, AIR 1967 All 231, which interpreted the words "personal fee" which ....