9911796707
TMI Blog1998 (11) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Tribunal was right in law in holding that the amount of subsidy received by the assessee should not be deducted from the actual cost of the assets for the purpose of granting depreciation and investment allowance ? and 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that salary and commission payments made to Shri K. Ameenur Rehman and Shri B. Akbar Pasha for the assessment years 1974-75 and 1975-76 would not form part of salary ?" The questions referred to us for the assessment years 1976-77, 1978-79 and 1980-81 are : "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the amount of subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under a separate agreement, which was meant to remunerate them for the efforts put in by them in securing export orders for the company. The salary paid to them, according to the assessee was for the services rendered by them as employees. The assessee claimed that the commission paid had not been received by these two persons in their capacity as employees and therefore those payments were to be regarded as their business income and not as salary income. Counsel referred to the case of Hochstrasser v. Mayes [1960] AC 376 ; [1961] 42 ITR 457 (HL). The House of Lords held that the amount paid by the employer to the employee to compensate his loss, arising from the sale of a house could not be regarded as an amount accruing to the employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, it would not have been taxable. How, then, can his loss be taxable, simply because he has been indemnified against it ?... If Mr. Mayes had been injured at work and received money compensation for his injuries, no one would suggest that it was a profit from his employment. Nor so here, where all he receives is compensation for his loss". The learned judge also observed that "I need hardly say that, if there were available to your Lordships a definition of 'profits', it would be a pearl of great price. But I am afraid that this pearl turned out to be cultivated and not real... It did not survive the critical examination of your Lordships." The learned judge also observed that the speeches showed the way in which judges look at cases, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trade. The court allowed the deduction of the commission paid as an item of expenditure under section 37 of the Income-tax Act, 1961. The Gujarat High Court also noticed the fact that the Tribunal had found that in that particular trade of dyestuffs and colour chemicals, it was the usual practice to pay secret commission to dyeing masters, printing masters, etc., in order to secure orders and to ensure that the supplier concerned increases his sales. But the court did not find it necessary to examine the morality or legality of such payments. The court, however, held that the payments having been made, the commission paid to the employees through whom such payments were effected depending upon the manner in which they were able to secure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business in which he is employed. If the employer chooses to remunerate those services by adopting different measures for different aspects of the services received from the employee, the payments nevertheless retain the character of compensation to the employee for the skill, labour and the time put in by the employee for the benefit of the employer. The definition of salary in section 17 of the Act is couched in wide terms to take into account the remuneration paid to the employee, whether it is labelled as salary or otherwise by the employer. It is not the label given to the payment that is determinative of the question as to whether it is salary. The definition of salary in section 17(1) of the Act is an inclusive definition. Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
