1985 (4) TMI 80

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....d places on record its appreciation of the personal qualities and outstanding calibre of Mr. Kumar by which the company has benefited phenominally. The Board wishes to made it expressly clear that the amount is not sought to be given as remuneration or salary for the services rendered for which he has been adequately remunerated under his terms of employment. The amount of Rs. 15,000 to be paid to Mr. Kumar is in token of the appreciation of his personal qualities and abilities." The ITO taxed this amount as a perquisite under s. 17(2)(iii)(c). The AAC held it as taxable because it was not exempt under s. 10(3) of the IT Act. His reasoning is as follows: "The term used 'Remuneration' in s. 10(3)(iii) is a wider term than the term 'Sal....

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....s. CIT (1963) 48 ITR 222 (SC) (v) CIT vs. K. K. Roy (1967) 66 ITR 179 (Cal) (vi) Mahesh Anantrai Pattani vs. CIT (1961) 41 ITR 481 (SC) (vii) Parimisetti Seetharamamma vs. CIT (1965) 57 ITR 532 (SC) (viii) Sewal Singh Ajit Singh vs. CIT (1980) 18 CTR (P & H) 224 : (1980) 126 ITR 732 (P & H). He also relied upon the decision of the Tribunal, Bangalore Bench in ITA No. 91/Bang-1982 dt. 11th Oct., 1982 where it has been held that the amount paid because of personal qualities cannot be taxed. The Tribunal also relied upon the decision of the Delhi High Court in the case of Lachhaman Das vs. CIT (1980) 124 ITR 706 (Del) where according to the Tribunal it was held that the payment made by an employer to an employee on personal cons....

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....lation and he drew our attention to the words "abilities" in the resolution and argued that the payment had been made to the assessee because of the abilities and not only personal qualities. He also pointed out the words "with a view to enthuse the other employees of the company to give the best of their abilities and display their personal qualities of leadership, drive and dedication" in the said resolution, and argued that this showed that the payment has been made for the example to the other employees which could be for nothing but work as employee. Therefore, according to him that payment had been made for his work as employee. He argued that in the Pattani's case the payment had been made out of love and affection and similar was a ....