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TMI Blog1985 (3) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment as salary and deducted tax therefrom. The assessee, however, claimed the commission part as not taxable on the ground that the assessee had surrendered the commission to its customers in order to enable him to arrive at the targeted sales. The inspector authorised to make the assessment, accepted the returns under section 143(1) of the Income-tax Act, 1961 ('the Act') without any discussion of the assessee's claim. The Commissioner on going through the records was of the view that the commission being a part of salary and not an allowance, had to be included in the assessment. He held in the common order under section 263 of the Act that the commission was as much a reward for the assessee's services as an employee as the regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were unsuccessful before the Commissioner and pointed out to a Third Member decision of this Tribunal in Sixth ITO v. Narendra V. Patel [1985] 11 ITD 587 (Bom.). 3. We have carefully considered the records as well as the arguments. On the question of jurisdiction, we are of the view that the assessee has no case inasmuch as the assessee's submission along with the return for exclusion of the commission payment was not considered at the time of the assessment. Since commission is prima facie income, non-enquiry in respect of the same, where enquiry is prima facie warranted constituted prejudice. However, the assessee's claim that the whole or any part of the commission is not liable to tax would need further examination than what has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se cases to qualify for treatment either wholly or partially as an allowance exempt under section 10(14) or at any rate as an amount not to be treated as part of salary as in the case of P.S. Balasubramaniam v. ITO [1982] 26 CTR (Trib.) 21 (Hyd.). Here, the assessee was an employee of Ramington Rand India and had received commission for securing orders and the assessee had incurred extra travelling expenses to earn that commission. The most recent decision is that of a Third Member in the case of Narendra V. Patel, again that of Development Officer of LIC. It was found in this case that account must necessarily be taken of all losses and expenses in order to arrive at salary in a commercial sense. The concept of real income as laid down by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the duties of an office of an employee within the meaning of section 10(14). The fact that it was treated as salary for the purpose of tax deduction at source, or the fact that it may be salary from the point of view of the employer, cannot abridge or take away the assessee's right to exemption if it is otherwise eligible. The department itself, as pointed out by the Tribunal, Chandigarh Bench, in its decision in Raj Kumar Sethi's case, has in F. No. 14/8/65/IT(A-I), dated 22-8-1965 considered 40 per cent as reasonable part of expenses from commission, while it is similarly noticed that in the case of commission to agents of Unit Trust of India (vide Board's F. No. 8/7/61/IT(A-I), dated 13-11-1961 and in the case of agents of Nationa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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