1981 (9) TMI 163

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.... 2. The first ground is that the Commissioner (Appeals) erred in directing the ITO to include dearness allowance as salary for the purpose of perquisites under section 40A(5) of the Income-tax Act, 1961 ("the Act"). The relevant facts are that in calculating the aggregate of the expenditure and allowance to be disallowed under section 40A(5)(c)(ii) the ITO did not include the dearness allowance p....

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.... be included as part of salary unless it enters into the computation of the superannuation or retirement benefits of the employees concerned. He, therefore, urged that the ITO was justified in excluding the dearness allowance for the purpose of applying the provisions of section 40A(5) as well. The learned counsel for the assessee, on the other hand, relied on the order of the Commissioner (Appeal....

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....tion of "salary" contained in Explanation 1 to rule 3, which has been relied upon by the learned departmental representative, has absolutely no application for the purpose of section 40A(5). The definition in the aforesaid Explanation I has been given only for the purpose of rule 3, namely, for valuation of the perquisite by way of rentfree residential accommodation provided by an employer to the ....