1990 (8) TMI 174 - AT - Income Tax

Concessional Rate, Equity Shares, Foreign Exchange, Indian Company, Short-term Capital Gains

Summary

Issues:
Taxability of income under the head "Salary"

Analysis:
The judgment involves a dispute regarding the taxability of income under the head "Salary" for the assessment years 1982-83 and 1983-84. The appellant, a Managing Director of a company, filed revised returns stating lower income from salary, claiming that the unpaid amount was not liable to be taxed. The appellant argued that only the actual amounts received should be taxed, not the amounts shown in the original returns. The Income Tax Officer (ITO) and the CIT (Appeals) held that the amounts shown in the original returns, which were due from the employer, were taxable under section 15(a) of the Income Tax Act.

The appellant contended that tax should be levied on the amounts actually received, not on the due amounts shown in the original returns. The appellant relied on legal principles such as the "real income" theory and cited relevant case laws to support their argument. The appellant emphasized that the tax was deducted at source based on the amounts in the salary certificates and that the balance sheet did not reflect any unpaid salary due. The appellant also argued that the terms of appointment approved by the Government dictated the salary amount.

The Appellate Tribunal upheld the orders of the CIT (Appeals), stating that section 15(a) of the Income Tax Act clearly includes "salary due from an employer, whether paid or not." The Tribunal emphasized that the amounts shown in the original returns, which were legally due to the appellant and approved by the Government, were taxable. The Tribunal distinguished the cited case laws, noting that the factual circumstances were different and not applicable to the present case. The Tribunal concluded that the tax should be levied on the amounts due as per the terms of appointment, even if not paid due to the company's liquidation.

In conclusion, the Tribunal upheld the decision of the CIT (Appeals) regarding the taxability of income under the head "Salary" for the appellant, emphasizing the legal clarity of section 15(a) of the Income Tax Act and the specific circumstances of the case. The Tribunal found the arguments and case laws cited by the appellant to be distinguishable and not supportive of the appellant's position.