1976 (1) TMI 32

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....ome-tax Officer in calculating perquisites admissible under section 40(c) of the Income-tax Act excluded the bonus paid, the value of the rent-free quarters and free conveyance, etc. On an appeal, the Appellate Assistant Commissioner, while confirming the exclusion of the value of rent-free quarters, free conveyance and insurance premium, directed the inclusion of the bonus in the salary paid for the purpose of calculating the value of the perquisites admissible. The revenue preferred an appeal to the Tribunal against this order of the Appellate Assistant Commissioner contending that only salary proper could be taken into account for the purpose of finding out the admissible and all other allowances and perquisites should be excluded. Accor....

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....spect of any obligation which but for such payment would have been payable by such employee), to the extent such expenditure exceeds one-fifth of the amount of salary payable to the employee for any period of his employment after the aforesaid date;... Explanation 2.--In sub-clause (iii), the word 'salary' shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule" We have omitted the provisos, as they are not relevant for the purpose of considering the question. Salary is defined in rule 2(h) of Part A to the Fourth Schedule, which is as follows: "2(h) 'salary ' includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites." The question....

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....ayment of Bonus Act, the bonus paid is part of the salary or wages. It is true that the Payment of Bonus Act is applicable only to employees drawing salary or wage not exceeding Rs. 1,600 per mensem. For employees, who are drawing more than Rs. 1,600 per mensem, the Act would not be applicable. But that does not mean that if an amount is paid as bonus it will have to be understood in any way different from the payment made to an employee, who is drawing less than Rs. 1,600. The recent development relating to the labour laws showed a change in the understanding of the nature of payment of bonus. It is no longer considered as a share of profits or gift or county made by an employer under his sweet will and pleasure. The employee by reason of ....