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TMI Blog2015 (9) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... the term used for re-deciding the salary as per revised norms, was a bit more generous than the Fifth Pay Commission Report itself. She was granted three increments in excess. When this error was detected by the auditor, she refunded the excess salary received, during the period April 1998 to November 2006, which worked out to Rs. 2,13,132. It was in this backdrop that the assessee disclosed net salary income of Rs. 2,43,689 as against actual salary received by her at Rs. 4,56,821. The same net salary was disclosed in form no.16 issued by the employer as well. However, in the course of scrutiny assessment proceedings, the Assessing Officer rejected the stand of the assessee and made an addition of Rs. 2,13,132/- by justifying the same as follows :- "Submission of the assessee is considered carefully but the same is not tenable. The assessee has put thrust on the fact that the assessee had right to receive reduced salary of Rs. 2,43,689/- only for the FY 2007-08, which is not true. Actually, the employer computed her salary to the extent of Rs. 4,56,821/- in respect of services rendered by her during the FY 2007-08 and therefore, the assessee was rightly paid gross salary of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2008-09 was Rs. 4,56,821/- and not Rs. 2,43,689/-, as declared by the assessee. There was in fact, no recovery pertaining to A.Y. 2008-09 and all of the recoveries pertained to the period referable to A.Y. 1998-99 to 2007-08. It is also true that her employer never reduced her gross salary amount and what accrued and became due to her during the financial year 2007-08, relatable to A.Y. 2008-09, is her total salary of Rs. 4,56,821/-, which is liable to be taxed. The lengthy arguments of the A/R relating to "accrual" or salary becoming "due" is misconceived and without any basis, more so over, when no amount of the recovery pertained to the period under consideration i.e. F.Y. 2007-08, referable to A.Y. 2008-09. In view of the above discussion, the order of the Assessing Officer in taxing whole of the salary accrued and due to the assessee during A.Y. 2008-09 is upheld. The assessee fails on this ground of appeal." 5. The assessee is not satisfied and is in further appeal before us. 6. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 7. We find that there is no dispute t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's being received or allowed - whichever is earlier. - The salary is not to be taxed on the basis of "accrual" since, in it's conscious choice of words, legislature has chosen the taxability on due basis or payment basis - whichever is earlier. We may add that the use of the expression "allowed", alongside "paid" refers to perquisites which are essentially non monetary and cannot be paid as such. - The Scheme of taxability of salary permits taxability of salary becoming due only once. Explanation 1 and Explanation 2 to section 15 unambiguously shows this thrust of the scheme of taxability of salaries. 9. It is in this backdrop that we have to examine the connotations of expression "any salary due from an employer" under section 15(1)(a) which can be brought to tax in the hands of the assessee. 10. In our considered view, in sharp contrast with the connotation of "accrual" of an income or of an income "arising", which refer to occurrence of an income and to income shaping into a measurable format respectively, such as, money, the connotations of an income becoming "due from" someone refers to an unqualified right to receive that income from that person. Viewed thus, mandate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Emphasis, by underlining, supplied by us) 13. Clearly, therefore, the employer was under a legal obligation to recover the excess salary paid, on account of wrong pay fixation, in the earlier years, from the salary which would have been normally payable after the mistake was detected. 14. In our considered view, in the light of the above discussions, it was not open to the assessee to demand that she should be paid entire amount of Rs. 4,56,821 without any adjustments or refunds of the excess amount received in the earlier years. We hold so in the light of the law liad down by Hon'ble Supreme Court which, as is elementary, binds all of us under Article 141 of the Constitution of India. If the assessee was entitled to receive only the net salary, net of recovery in respect of excess salaries received earlier, it cannot be said that the entire amount of salary, without such a recovery, was due to her. What was due to the assessee was the salary accrued during the year minus the excess salary received earlier. 15. On the facts of this case, the employer was well within his powers to make recovery for excess payments made earlier. The excess payment made to the assessee was al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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