TMI Blog2013 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... other definition of 'salary' cannot be imported and applied to such sections. This view is supported by the direct decision of the Hon'ble Madras High Court in the case of K. Gopal Krishan v. Central Board of Direct Taxes [1994] [1993 (4) TMI 33 - MADRAS HIGH COURT] - against assessee. - IT APPEAL NOS. 756 TO 758 (CHD.) OF 2012 - - - Dated:- 27-12-2012 - MS. SUSHMA CHOWLA AND MEHAR SINGH, JJ. M.R. Sharma for the Appellant. J.S. Nagar for the Respondent. ORDER Mehar Singh, Accountant Member - The present appeals filed by different assessees are directed against the order dated 25.05.2012 passed by the ld. CIT(A) u/s 250(6) of the Income-tax Act, 1961 (in short 'the Act'). 2. In these appeals, the assessees have raised similar grounds of appeal, except variation in amount of additions. Therefore, Grounds of Appeal, as raised by the assessee in ITA No. 756/Chd/2012, are reproduced hereunder as an illustrative case : 1. The word salary has nowhere in the Income Tax Act has been defined as Basic (+) DA. Section 17 of the Act defines, salary includes wages. Wages has been defined in the Minimum Wages Act-1948 and Payment of Gratuity Act, 1972 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, as applicable to the gratuity and leave encashment, for the purpose of working out the eligible amount of gratuity and leave encashment. The relevant findings of the AO, are reproduced in para 5 6 of the order dated 27.10.2011, for the assessment year 2008-09, passed u/s 143(3) red with section 147 of the Act. The relevant part of the impugned order is reproduced hereunder : 5. Gratuity : The assessee received gratuity of ₹ 350000/-which has been claimed as exempt u/s 10(10) of the Income-tax Act, 1961. The exempt amount of gratuity in the case of assessment was worked out at ₹ 255015/- by taking half month's average salary on the basis of last ten months' salary drawn multiplied by no. of years of service rendered and the assessee was asked vide note sheet entry dated 14.10.2011 to explain as to why gratuity of ₹ 94985/- may not be added to his income. The assessee vide his reply dated 20.10.2010 has furnished a copy of bank's letter dated 19.10.2011 stating that gratuity has been paid to the assessee under the Gratuity Act, 1972. Since the gratuity has been paid to the assessee under the Gratuity Act as confirmed by the bank in its letter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same : 5.1 The facts of the case is that the assessee received gratuity of ₹ 3,50,000/- which was claimed as exempt u/s.10(10). As contended by the appellant before the AO, the gratuity was paid as per Gratuity Act and therefore the AO recomputed the exempt amount by taking half months average salary on the basis of last ten months salary drawn (basic plus D.A) multiplied by number of years of years of service rendered. When confronted as to why the excess gratuity claimed be not disallowed, the appellant did not offer any comment. The excess claim of ₹ 35,000/- was therefore disallowed. Before me the appellant contended that bank salary mean basic pay, special pay, fixed personal pay, professional pay and DA. 5.3 I have gone through the submissions made and I am of the opinion that the AO has rightly computed the amount of gratuity exempted under the Act by following definition of salary as per Fourth Schedule, Part A Rule 2(h) which defines salary for the purpose of this Act. 5.4 In view of this part of the ground no. 2 is dismissed. 6. The third part of the 2nd ground of appeal contests the disallowance of ₹ 29,060/- out of leave encashment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) and 10(10AA) of the Act. The head-notes of the decision are reproduced hereunder : Exemption-Constitutional Validity of Provision-Gratuity-Exemption Granted by Sections 10(10) and 10(10AA) - Difference Between Employees of Government and Statutory Corporations and Employees in Private Sector - Provisions do not Offend Article 14 - Provisions are Valid-Meaning of Salary For Purposes of Sections 10(10) and 10(10AA)- No General Definition of Salary in the Income-tax Act Applicable for all Provisions-Definition of Salary in Sections 10(10) and 10(10AA) is Valid-Income-tax Act, 1961, ss. 10(10), 10(10aa)- Constitution of India, Arts. 14, 226. 8(ii) The Hon'ble Madras High Court further held as under : There is no general definition of the word salary applicable for all the provisions of the Income-tax Act. The Explanation to section 10(10) states that, In this clause and in clause (10AA) 'salary' shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule to the Income-tax Act . Clause(h) of rule 2 of Part A of the Fourth Schedule reads that salary includes dearness allowance, if the terms of employment so provide, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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