2003 (4) TMI 36

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..... y the Tribunal under section 256(1) of the Income-tax Act, 1961, the following three questions have been referred for our opinion arising during the assessment year 1978-79. This reference is at the instance of the Department. Question No. 1: "Whether the Tribunal was right in holding that the club membership fees paid to the employees of Citibank did not constitute perquisite within the meaning .....

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..... o parts. The first part of the question is: "Whether the Tribunal was right in holding that for the purpose of disallowance under section 40A(5), the word 'salary' included encashment of unavailed leave?" It is argued on behalf of the assessee that section 40A(5) refers to disallowance in the hands of an employer. It was submitted that section 40A(5) does not cover non-periodic payments, not rel .....

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..... ered by the previous year. That including such payment in section 40A(5) would make it impossible to calculate the ceiling prescribed in that section and, therefore, such payments cannot be considered as forming part of the expenditure covered by section 40A(5). We do not find any merit in this argument. Section 40A(5), inter alia, states that where the assessee incurs any expenditure which result .....

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..... u of or in addition to any salary or wages. The expression "profits in lieu of salary" is also defined in an inclusive manner in section 17(3) of the Act and it includes within its purview, any payment due to or received by an assessee from his employer. In the circumstances, we hold that the word "salary" in section 40A(5)(a)(i) would cover retirement benefits like pension as also encashment of e .....

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..... nditure in the year of purchase of securities?" Answer: In view of our judgment in the case of American Express International Banking Corporation v, CIT [2002] 258 ITR 601 (Bom), the above question is answered in the affirmative, i.e., in favour of the assessee and against the Department. The Reference stands disposed of accordingly. No order as to costs.
Case laws, Decisions, Judgements, O .....

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