TMI Blog1975 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of the assessee was erroneous in so far as it is prejudicial to the interests of the revenue ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was not entitled to the deduction of the house rent of Rs. 3,720 paid by him at Jabalpur, from such compensatory allowance, either under section 10(14) or under section 16(v) of the Income-tax Act, while computing his total income ? " The facts leading to the present reference are that the petitioner-assessee, now retired but at the relevant time functioning as the Chief Justice of the Madhya Pradesh High Court, was being assessed for the assessment year 1970-71. During that period he had received an amount of Rs. 4,567.75 as a compensatory allowance granted by a Presidential order under article 222(2) of the Constitution of India. The petitioner in his return claimed that his total income of Rs. 40,654 only was liable to be taxed. A note was put up in the return that the amount of compensatory allowance received by virtue of the Presidential order was not taxable either as salary or as income. In the alternative it was contended on behalf of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch High Court such salaries as are specified in the Second Schedule. (2) Every judge shall be entitled to such allowance and to such rights in respect of leave of absence and pension as may from time to time be determined by or under law made by Parliament and, until so determined, to such allowances and rights as are specified in the Second Schedule : Provided that neither the allowances of a Judge nor his rights in respect of leave of absence or pension shall be varied to his disadvantage after his appointment." Refering to the Second Schedule mentioned in the said article, we find item No. 10 in part-D, as follows : " 10. (1) There shall be paid to the Judges of High Courts, in respect of time spent on actual service, salary at the following rates per mensem, that is to say,-- The Chief Justice 4,000 rupees Any other judge 3,500 rupees Provided that if a judge of a High Court at the time of his appointment is in receipt of a pension (other than a disability or wound pension) in respect of any previous service under the Government of India or any of its predecessor Governments or under the Government of a State or any of its predecessor Governments, his salar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich provides for transfer of a judge from one High Court to another and it is in lieu of such transfer that the compensatory allowance becomes payable. The said article is as follows : " 222. Transfer of a Judge from one High Court to another.--(1) The President may, after consultation with the Chief Justice of India, transfer a Judge from one High Court to any other High Court. (2) When a Judge has been or is so transferred, he shall, during the period he serves, after the commencement of the Constitution (Fifteenth Amendment) Act, 1963, as a Judge of the other High Court, be entitled to receive in addition to his salary such compensatory allowance as may be determined by Parliament by law and, until so determined, such compensatory allowance as the President may by order fix." In the present case, Parliament has not made any law and the matter is governed by the Presidential order, which however has not been filed on record. In our opinion, that is immaterial. We presume that the Presidential order must be in consonance with the requirements of sub-clause (2) of article 222 of the Constitution of India. The learned counsel for the department also did not press for filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under Rule 6 of Part A of the Fourth Schedule ; and (vii) the aggregate of all sums that are comprised in the transferred balance as referred to in sub.rule (2) of Rule 11of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof." " (2) 'Perquisite' includes-- (i) the value of rent-free accommodation provided to the assessee by his employer ; (ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer ; (iii) the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases-- (a) by a company to an employee who is a director thereof ; (b) by a company to an employee being a person who has substantial interest in the company ; (c) by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub-clause do not apply and, whose income under the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of "salary" and "perquisite" in section 17 of the Act is inclusive, the definition cannot go beyond the dictionary meaning, which would include the specific items mentioned in sub-sections (1) and (2) of the said Act. Therefore, the word "salary" implies remuneration for services rendered. The word "perquisite" signifies some additional benefits conferred on the employee in addition to his salary ; while "compensatory allowance" is allowance in the nature of compensation to counter-balance the loss suffered by an employee. By no stretch of imagination can we equate the phrase " compensatory allowance " either with salary or with perquisite. Moreover, compensatory allowance would not at all be covered by any of the sub-clauses of sub-section (1) or (2) of section 17 of the Income-tax Act, 1961. The learned counsel for the department made no attempt to bring it within the ambit of any of the said sub-clauses. The taxing authorities purported to rely on the decision of a Division Bench of the Kerala High Court in A. K. Venkiteswaran v. Commissioner of Income-tax . In that case an Income-tax Officer was required to take a house on rent for the purposes of his duty and he cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the implication of the phrase " compensatory allowance " used in article 222(2) of the Constitution of India. At any rate, it cannot, in our opinion, be equated either with " salary " or with " perquisite ". As already pointed out by us earlier, " salary " would mean remuneration for services rendered. Any compensatory allowance can never be interpreted to signify additional salary. It is a counter-balance for the loss or inconvenience suffered. Similarly, the phrase " perquisite " would mean additional benefit to an employee in addition to his salary. In the case of compensatory allowance, there is no question of, additional benefit, but merely counter-balancing the loss or inconvenience sustained. Similarly, the compensatory (city) allowance would be for the extra cost that an employee may have to incur by being required to stay in a big city where things would be dearer than in small towns or villages. To conclude, we are of opinion that the compensatory allowance granted to the petitioner by the Presidential order could not be considered to be additional salary or perquisite under section 17(1) or section 17(2) of the Income-tax Act, 1961. In the view that we take on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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