TMI Blog1971 (8) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ) : K. K. MATHEW., T. S. KRISHNAMURTHY IYER. JUDGMENT The judgment of the court was delivered by MATHEW J.-This is a reference under section 256(1) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax. The question of law referred is: "Whether the tax borne by the assessee's employer was includible in the total amount of salary for the purpose of computing the value of the rent-free accommodation given to the assessee under rule 24A of the Indian Income-tax Rules, 1922?" The assessee is an employee of the National Grindlays Bank Ltd. He was given rent-free quarters, as also allowances, such as car allowance, servants' allowance and fuel and electricity allowance. The employers had paid the income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude perquisites such as income-tax paid by the employer and should not be taken into account in determining the value of the rent-free quarters. It, therefore, allowed the appeal. The question for consideration is whether "salary" of the assessee would include the income-tax paid by the employer. The method of computing the value of rent-free quarters is laid down in rule 24A(1)(a) of the Indian Income-tax Rules, 1922, which reads: " 24A. (1) For the purpose of computing the income chargeable under the head "salaries" the value of the perquisites (not provided for by way of monetary payment to the assessee) mentioned below shall be determined in accordance with the following clauses, namely: (a) The value of rent-free residential acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation which but for such payment would have been payable by the assessee; and ......" Section 18(2) provides that any person responsible for paying any income chargeable under the head "salaries" shall, at the time of payment, deduct income-tax and super-tax on the amount payable. Section 18(4) states that all sums deducted in accordance with the provisions of this section shall, for the purpose of computing the income of an assessee, be deemed to be income received. Section 18(7) provides that, if any person does not deduct or after deducting fails to pay the tax as required by or under this section, he shall, without prejudice to any other consequences, which he may incur, be deemed to be an assessee in default in respect of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worth to the extent of the sum which has been paid as income-tax in respect of the salary to the revenue. "Salary" is defined in Shorter Oxford Dictionary as follows: " Fixed payment made periodically to a person as compensation for regular work; now usu. for non-manual or non-mechanical work (as opp. to wages). 2. Remuneration for services rendered; fee, honorarium, reward, recompense." In Webster's International Dictionary, the meaning of "salary" is given as follows: " 1. To pay (as a person) for something done: Recompense, Reward. 2a. To pay a salary to (a person): b. To attach a salary to (a position)." In Black's Law Dictionary, "salary" is defined as follows: " A reward or recompense for services performed. In a more limit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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