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TMI Blog1980 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... thered from the statement of the case may be briefly stated thus : The assessee, an individual, is an employee of M/s. Harrisons Crossfield Ltd. The assessment year with which we are concerned is 1975-76 for which the relevant accounting period is the year ended March 31, 1975. During the said period the assessee had received Rs. 38,110 by way of salary, dearness allowance and bonus. Out of the said amount, Rs. 4,410 represented the bonus received by the assessee from his employer. The assessee had also received from the employer during the accounting period an amount of Rs. 4,200 as house rent allowance. The, actual rent paid by him during that year was Rs. 4,350. Section 10(13A) of the Act provides for grant of exemption in respect of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rule 2 of Part A of the Fourth Schedule (ii) ' relevant period ' means the period during which the said accommodation was occupied by the assessee during the previous year." It will be seen that under this rule the limit for the grant of exemption in respect of house rent allowance is to be the least of the amounts calculated in accordance with the provisions contained in cls. (a) to (d). For the purposes of working out the amount under cls. (b) and (c) it becomes relevant to determine what amount was due to the assessee as salary in respect of the relevant period. Under the Explanation to the rule the expression " salary " is to be given the meaning assigned to it in cl. (h) of r. 2 of Pt. A of the Fourth Schedule to the Act. We sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as part of the salary. The department preferred an appeal before the Tribunal but the Tribunal confirmed the order of the AAC as per its order dated February 18, 1978. On interpreting the relevant provisions contained in the Fourth Schedule to the Act the Tribunal was of opinion that, for the purposes of these provisions, the expression " salary " would not include bonus and, since the definition of " salary " contained in the Fourth Schedule is made applicable for the purposes of r. 2A, bonus cannot be treated as part of the " salary " while determining the quantum of benefit to be allowed to an assessee under the said rule. On the motion made by the department the Tribunal has there after referred the question of law to this court as ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that, save in exceptional cases which may stand on a different legal footing, bonus is not ordinarily paid under the terms of the contract of employment as part of the remuneration due to the employee for the services rendered by him. It is now well settled by the decisions of the Supreme Court that bonus is not a deferred wage but it is something paid to the employee in addition to wages. Such being the position, we find it difficult to uphold the contention of the counsel for the revenue that bonus is paid to an employee as part of his " salary " as defined in r. 2(h). The scope of the definition contained in cl. (h) of r. 2 came up for consideration before the Supreme Court in Gestel nor Duplicators R Ltd. v. CIT [1979] 117 ITR 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be determined only by reference to the definition of that expression as contained in r. 2(h) of Pt. A of the Fourth Schedule to the Act. On a close study of the said rule in conjuction with rr. 4 and 5 of the same part in the same schedule, it appears to us to be Perfectly clear that bonus cannot be regarded as falling within the scope of the expression "salary " as defined in cl. (h) of r. 2. Clauses (b) and (c) of r. 4 contain a clear indication that the expression " salary' 'takes in only, periodical payments made by the employer to the employee, during a year by way of remunera tion. Clause (4)(b) of r. 5 empowers the Commissioner to relax the provisions of r. 4(c) and to permit the crediting by the employers to the individual acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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