TMI Blog1990 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ld form part of salary paid to the employees for the purpose of computing the disallowance under section 40A(5) of the said Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 65,421 paid to the managing director as salary and perquisites, which became recoverable from the payee within the relevant 'previous year' by virtue of his appointment not getting the approval of the Central Government was allowable as a deduction in computing the assessee's income for the assessment year 1979-80?" Shortly stated, the facts are that the Income-tax Officer included the cash allowance as perquisite for the purpose of disallowance under section 40A(5) of the Act. The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps (India) Ltd. [1988] 172 ITR 333 (Cal) is of no aid. The question has to be answered independently. "Salary" is defined in Explanation 2 below section 40A(5) in the following terms: "(a) `Salary' has the meaning assigned to it in clause (1) read with clause (3) of section 17 subject to the following modifications, namely : (1) in the said clause (1), the word `perquisites' occurring in subclause (iv) and the whole of sub-clause (vii) shall be omitted ; (2) in the said clause (3), the references to `assessee' shall be construed as references to `employee or former employee' and the references to `his employer or former employer' and `an employer or a former employer' shall be construed as references to 'the assessee'. " The definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Income-tax Officer, the assessee went in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) held that the Income-tax Officer was justified in coming to the conclusion that the salary and perquisites paid to Shri Chakraborty were not admissible for deduction. The Commissioner of Income-tax (Appeals), however, directed the Income-tax Officer to verify the actual amount of salary and perquisite paid to Shri Chakraborty for the period from January 1, 1978, to July 28, 1978, and restrict the disallowance to the actual salary and perquisite paid to Shri Chakraborty. The Tribunal was of the view that the actual salary paid for the services rendered by the managing director for the period f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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