COMMISSIONER OF INCOME TAX Vs. C P GANGADHARAN
LAWS(KER)-2003-4-11
HIGH COURT OF KERALA
Decided on April 02,2003

COMMISSIONER OF INCOME TAX Appellant
VERSUS
C P Gangadharan Respondents

JUDGEMENT

S.SANKARASUBBAN,J. - (1.) QUESTIONS of law raised in the above cases are as follows.: 'Whether on the facts and in the circumstances of the case : (i) The Tribunal is correct in holding that incentive bonus received by theassessee from his employer is riot part of salary ? (ii) The Tribunal is correct in holding that the assessee is entitled to claim 40 percent deduction of the incentive bonus as deduction in computing the taxableincome ?' The questions are covered by the decision in CIT v. T.K. Ginarajan,Development Officer, LIC of India : [2002]253ITR463(Ker) , wherein it is held as follows : 'Whether any expenditure is allowable inthe computation of income or any receipt has to be added to income only afterproviding for the expenditure is a matter to be found in the statute, that is, theIT Act. The scheme of the Act is compartmentalisation of income under various heads and computation of the taxable portion strictly in accordance with the formula of deductions, rebates and allowances provided therein. The first step in this regard is to identify the head under which the income is assessable. Deductions and allowances are specific for each head of income. The definition of 'salary' under Section 15 of the IT Act, 1961, is so wide and is only an inclusive one taking in all receipts from the employer in the form of wages, commission, bonus, profits in lieu of or in addition to salary, etc. Therefore, any payment by the employer to the employee towards consideration for services rendered in thecourse of employment comes within the description of 'salary' which includesperquisites as well'.
(2.) IN the above view of the matter, the questions are answered in favour of the Department and against the assessee, Learned counsel for the assessee contended that insofar as these questions are concerned, they were decided under Section 143(1)(a) of the IT Act and since there was a debatable point, the authority should not have decided under Section 143(1)(a) of the above Act. According to us, we cannot go into that procedure. We are only bound to answer the questions in accordance with law. . . . IT references are disposed of as above.;


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