TMI Blog1976 (1) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 40(c) of the Income-tax Act excluded the bonus paid, the value of the rent-free quarters and free conveyance, etc. On an appeal, the Appellate Assistant Commissioner, while confirming the exclusion of the value of rent-free quarters, free conveyance and insurance premium, directed the inclusion of the bonus in the salary paid for the purpose of calculating the value of the perquisites admissible. The revenue preferred an appeal to the Tribunal against this order of the Appellate Assistant Commissioner contending that only salary proper could be taken into account for the purpose of finding out the admissible and all other allowances and perquisites should be excluded. According to the department, bonus is not salary or included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been payable by such employee), to the extent such expenditure exceeds one-fifth of the amount of salary payable to the employee for any period of his employment after the aforesaid date;... Explanation 2.--In sub-clause (iii), the word 'salary' shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule" We have omitted the provisos, as they are not relevant for the purpose of considering the question. Salary is defined in rule 2(h) of Part A to the Fourth Schedule, which is as follows: "2(h) 'salary ' includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites." The question for consideration is whether the bonus paid is included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or wages. It is true that the Payment of Bonus Act is applicable only to employees drawing salary or wage not exceeding Rs. 1,600 per mensem. For employees, who are drawing more than Rs. 1,600 per mensem, the Act would not be applicable. But that does not mean that if an amount is paid as bonus it will have to be understood in any way different from the payment made to an employee, who is drawing less than Rs. 1,600. The recent development relating to the labour laws showed a change in the understanding of the nature of payment of bonus. It is no longer considered as a share of profits or gift or county made by an employer under his sweet will and pleasure. The employee by reason of his contribution or participation in the business of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as inserted on April 1, 1963, and contended that at the time when the original provision was inserted, the Payment of Bonus Act was not in force, and it will have to be understood with reference to the law relating to bonus at the time when the provision was originally inserted. We are unable to agree with this contention of the learned counsel also, as the original provision was different and was completely omitted and a new provision was substituted with effect from April 1, 1964. We are of the view, therefore, that having regard to the general understanding of the word 'bonus', payment of bonus should be treated as forming part of the salary itself. The question referred to us is, therefore, answered in the affirmative and against the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
