9911796707
TMI Blog1999 (4) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... were furnished. On going through the return, the Assessing Officer found that there was short deduction of tax at source from the salary and allowance payable to some of the employees. In response to a show-cause notice issued by the Assessing Officer, it was stated that in working out the tax deductible on the payments made to the employees, the dearness allowance payable to the employees of the Corporation did not form part of salary for working out the exemption on house rent allowance under section 10(13A) of the I.T. Act and accordingly, house rent allowance was not included while determining the tax to be deducted at source in respect of the salary of the employees. The Income-tax Officer (TDS) found that on account of non-inclusion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the total income of an assessee in respect of the special allowance referred to clause (13A) of section 10 shall be --- (a) the actual amount of such allowance received by the assessee in respect of the relevant period; or (b) the amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee in respect of the relevant period; or (c) an amount equal to ---- (i) where such accommodation is situate in any one of the following places, namely :---- Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Calcutta, Coimbatore, Delhi, Faridabad, Gwalior (Lashkar), Hyderabad, Indore, Jabalpur, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding dearness allowance if the terms of employment provided for payment of dearness allowance. The assessee's claim is that though dearness allowance is payable to the employees, it is not a payment in terms of any agreement with them. Shri Awatar submitted before us that it was the practice of the Corporation to give all the benefits like employer's contribution to the Provident Fund, Gratuity etc. calculated with reference to pay only and that there is no stipulation in the terms of employment to the effect that dearness allowance would be treated as part of salary. He also brought to our notice the decision of the Kerala High Court in the case of CIT v. B. Ghosal [ 1980] 125 ITR 744/ 4 Taxman 55 wherein it was held that for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Dearness Allowance -- You will draw dearness allowance at the rates prescribed by the Corporation from time-to-time. The present rates of dearness allowance are as under : --- Pay range in the pay scale Dearness allowance per month (Rs.) (i) Officers drawing pay up to Rs. 2,500 % of pay (ii) Officers drawing pay between Rs. 2,501 and Rs. 4,000 Rs........... plus of pay in excess of Rs. 2,500 (iii) Officers drawing pay between Rs. 4,001 and Rs. 4,260 Rs........... plus of pay in excess of Rs. 4,000 (iv) Officers drawing Rs............. plus of pay pay above Rs. 4,260 in excess of Rs. 4,260." 6. From the above, it can be seen that at the time of the appointment the employees are informed of the terms of their employment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact about payment of dearness allowance, in the appointment order itself as part of the terms of employment. The decision of the Kerala High Court in B. Ghosal's case is on the question as to whether salary includes 'bonus' for the purpose of section 10(13A). There is no finding in that case that salary does not include dearness allowance for the purpose of section 10(13A). As a matter of fact, in that case there is the observation that even dearness allowance is not regarded as salary unless there is clear stipulation in the contract of employment that such allowance shall form part of salary. We do not think that the observation of the Court, would in any way, support the contention of the assessee. If the terms of employment provide ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
