9911796707
TMI Blog1984 (7) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITO held that salary as well as the payment in lieu of privilege leave totalling Rs. 70,680 was in excess of limit of Rs. 5,000 per month under section 40A(5)(c) of the Income-tax Act, 1961 ('the Act'). He, accordingly, disallowed Rs. 10,680 (after allowing salary for twelve months though Kejriwal was employed for eleven months). 3. The Commissioner (Appeals), following CIT v. Manjushree Plantations Ltd. [1980] 125 ITR 150 (Mad.), held that payment in lieu of privilege leave of Rs. 25,855 was neither salary nor perquisite and, therefore, was not hit by section 40A(5). He, accordingly, deleted Rs. 10,680. 4. The revenue is in appeal before us. We accept the revenue's contention that while there is authority for holding that cash payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can be arrived at from the above discussion is that majority of the High Courts have held that cash payment is not a perquisite. 5. Insofar as the Tribunal had held in Manjushree Plantations Ltd.'s case, as referred in the High Court's order, that cash payment is not salary, the said view is patently erroneous as discussed above. The Tribunal, Special Bench,Bombay, in Blackie Sons (India) Ltd. v. ITO [1983] 3 SOT 72 in para 19 had clearly held that cash payments, though not perquisites, were assessable as salary. The whole argument that cash payments were not perquisites started with the premise that cash payments were covered under 'Salaries' and, therefore, the Legislature never intended it to be treated as perquisite. 6. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt from tax. Similar view was taken by the Hyderabad Bench in ITO v. A.N. Mathur [1983] 71 Taxation (6) 110 (Hyd.). The Tribunal, Delhi Bench 'C', in B.N. Poddar [Appeal No. 1606 (Delhi) of 1983] by order dated23-3-1984(to which one of us was a party) had followed the aforesaid decisions. 9. Respectfully following the aforesaid decisions, we hold that encashment of privilege leave did not fall under the head 'Salaries' as defined in section 17 of the Act nor under Explanation 2(a) to section 40A(5). Thus, the encashment of privilege leave has to be excluded for computation of disallowance under section 40A(5). We, accordingly, uphold the order of the Commissioner (Appeals), though for different reasons. 10. In the result, the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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