9911796707
TMI Blog1982 (10) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... on is admissible against receipt by way of commission. In appeal AAC however accepted the assessee's claim following an order of the Tribunal in the case of Shri Rajendran vs. ITO, city Circle II (6) Coimbatore in ITA Nos 1324 & 1325 (Mds) 78-79 'C' Bench dt. 24th November, 1979. According to this decision as noticed by him even if the commission is salary taxable under the same head what is required to be determined is the exact figure of commission received by the assessee from year to year and it would only be the net figure after deducting actual expenditure incurred by the assessee which would be commission. Aggrieved by the order of the AAC the department is in appeal before the Tribunal. 2. The submission of the ld. departmental representative before us is that the assessee is merely an employee entitled to receive fixed salary and commission and the commission received by him also forms part of salary as per its definition in sec. 17 and deductions contemplated by s.16 of the Act in computing the income under the head 'salaries' do not provide for any deductions of the nature claimed by the assessee in this connection the assessee is not entitled to the same. Reliance is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbrellas and banians by way of remuneration and will in the event of having repair and/or pedicure sections attached to the shoe stores be entitled to the profits of repair works and pedicure turnover except that he will have to contribute to the company 10 and nil percent respectively on the turn over or repair work and pedicure. (b) The rate of commission, the fixed salary, weekly, the estimated commission weekly and the estimated weekly income and the guaranteed income are shown below. Rate of Commission Fixed salary weekly Estimated commission weekly Estimated income weekly 100 % fixed & 90% est. Comm. fort nightly(guaranteed) Ratio of shop exp. . Rs. Rs. Rs. Rs. . 1.65% 101.00 314.00 415.00 767.00 0.40% (c) The employee's estimated income per week set forth in chart for the particular and he will draw 100% of his fixed salary and 90% of the estimated commission fortnightly less his contribution towards Provident Fund at the rate 8% and Income Tax quantum as indicated in the data sheet through the fort nightly statement irrespective of his achievement. If during a seasons the employee fails to earn 90% of the estimated commission for no fault or negligence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf. If, however, at the end of each seasons the expenses incurred in any shop exceed the prescribed ratio the employee may represent his case to the company supported by expenses vouchers for the purposes of compensation. In case of any deduction from the amount of compensation claimed, Shop manager concerned will be informed of the disapproval of the voucher(s) and the reasons thereof; otherwise the compensation claimed will be paid in full. The discovered voucher(s) will be returned. (6) The employee shall remain responsible to properly preserve and look after the stock of shoes and other goods including furniture fittings customer's articles as well as the advertisement accessories. Stock of shoes which becomes 'deed stock' in the Shoe Store due to unpopularity of designs or improper fittings will be cleared at the instruction and cost of the company. In case of articles retained by the employee in spite of manufacturing defects and not returned with in four weeks of delivery such stock will be cleared by the employee on his own account. Goods spoiled in the Shoe Store due to improper and negligent handling by the employee or other assistant or by reason of delay in the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars about such fire, theft, burglary or breakage and conditions preceding such occurance giving exact amount of loss and damage and detailed descriptions of damage, loss or stolen articles. The employee shall be personally held liable for the whole loss suffered or for damage, if the company is of opinion that such theft, fire, burglary or breakage happened owing to even slight negligence and carelessness on the part of the employee or any other person acting under him. (19) The employee shall personally arrange for the proper safety of the sale proceeds and other money belonging to the company that may be with him and he shall remain wholly liable and responsible to the company for any loss of the sale proceeds, or other money aforesaid on account of any reason whatsoever including force majeure, pick-pocket, burglaries, house breaking etc. The employee shall not sell any goods from the said store and the Repair and pedicure organisations other than for cash. No cash exceeding the agreed insured amount of sale proceeds shall be retained in the shop and such cash shall not be kept over night in any place other than the wallcoffer, provided in the shop. Any loss of cash arisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has no need to incur any expenditure beyond the amount fixed by the company or any such expenditure incurred is not for the purpose of earning the commission and other gains under the agreement. Having regard that the principle of the decision of the Supreme Court in CIT vs. Manmohan Das (1966) 59 ITR 699 (SC) involving some what similar circumstances and terms of agreement we hold that in present case the agreement, between the assessee and the company is not a mere contract of employment or a contract of service simpliciter, but is a contract also for service and while the fixed salary is referable to the assessee's role as an employee, the commission and profits on repair and pedicure section contemplated in the agreement do not fall to be charged under the head "salaries" but either under the head "income from business" or under the head "income from other sources" and as claimed by the assessee in either case, namely, whether it is an income from business or income under the head 'income form other sources', all expenditure incurred for earning the amount is deductible in arriving at the income. We, therefore, uphold the order of the AAC allowing the deduction to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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