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TMI Blog1971 (8) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... tional & 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 of the assessee to the extent of Rs. 10,220. The assessee was in India during the period January 1, 1960, to December 12, 1960. The salary and allowance during this period came to Rs. 21,535. The assessee calculated the value of the rent-free quarters at 12 1/2% of Rs. 21,535 which came to Rs. 2,691.87. The Income-tax Officer held that, in arriving at the value of the rent-free quarters, the income-tax paid by the assessee's employer of Rs. 10,220 should also be taken into account. According to the Income-tax Officer, the payment of income-tax b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes (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 accommodation shall ordinarily be estimated at a sum equal to, where the accommodation is not furnished, 10 per cent., where the accommodation is furnished, 12.5 per cent., of the salary due to the assessee in respect of the period of his occupation of the said accommodation during the relevant previous year, but..... " The second clause of the Explanation to rule 24A(1)(b) of the above Rules defines "salary" as follows: "'salary' includes the pay, allowances, bonus or commission payable monthly or otherwise, but does not include the following, na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 tax. The income-tax paid by the employer was really the income of the assessee. The assessee received his salary free of income-tax. The amount of his salary was really increased by the amount of the tax. A contract to pay salary without deduction of tax is neither more nor less than a contract to pay the amount of the salary plus the amount of tax; and in such a case the profit of the office or employment is measured by the sum of the two figures. If the assessee were asked what profit he gets from employment he would say that he gets so much amount in money a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 limited sense a fixed periodical compensation paid for services rendered;......" The definition of "salary" in Explanation 2 to rule 3 is an inclusive definition. It includes pay. If the income-tax paid by the employer is not salary as ordinarily understood, we think, it is part of the pay of the assessee. It was contended on behalf of the assessee that there was no definition of the word "salary" in the Income-tax Act, 1922, that in defining salaries salary is separately mentioned from perquisites in section 7, and that income-tax paid was only a perquisite as defined ..... X X X X Extracts X X X X X X X X Extracts X X X X
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