PREMIER DIE CASTING AND ENGG CO LTD Vs. INSPECTING ASSISTANT COMMISSIONER
LAWS(IT)-1989-11-8
INCOME TAX APPELLATE TRIBUNAL
Decided on November 27,1989

Appellant
VERSUS
Respondents

JUDGEMENT

K.R. Dixit, Judicial Member - (1.)IN this case the assessee's grievance is that its claim for weighted deduction under Section 36(l)(iia) has not been allowed. The assessee had paid Rs. 22,830 as salary to an employee. The INcome-tax Officer disallowed the assessee's claim under the aforesaid section on the ground that it exceeded Rs. 20,000 and so the assessee's case was covered by the second proviso to the said sub-section. The assessee's contention was that in calculating the salary standard deduction had to be taken into account and if that was done in this case it would not exceed Rs. 20,000. Therefore, the question before us is whether the standard deduction must be taken into account or not.
(2.)The assessee's counsel first of all pointed out that for the asst. years 1981-82 and 1982-83 the Income-tax Officer had at first issued notices for rectification for withdrawing the relief granted but had dropped these proceedings. Therefore, he submitted that the words in the said proviso 'income chargeable under the head salaries' were the same as in Section 16. Therefore, according to him, Section 16 was applicable in this case. On the other hand, the learned Departmental Representative submitted that it was Section 15 which was to be taken into account because that was the charging section.
First of all, the fact that the Income-tax Officer had dropped the rectification proceedings for the earlier two assessment years is not relevant for our purpose. That might have been done because the issue was debatable. We have, therefore, to consider the question on merits. Under the said Sub-clause (iia) the assessee is entitled to a deduction of a sum equal to one and one-third times the amount of expenditure incurred on payment of any salary to an employee who suffered from the disabilities mentioned in that section. The second proviso is as follows:-

Provided further that nothing contained in this clause shall apply in the case of an employee whose income in the previous year chargeable under the head 'Salaries' exceeds twenty thousand rupees.

The question therefore, is whether the salary income of the employee exceeded Rs. 20,000 or not. The material part of Section 16 is as follows:-

The income chargeable under the head 'Salaries' shall be computed after making the following deductions.

Under Section 15 the following income shall be chargeable to income-tax under the head "Salaries".

(3.)IT is no doubt true that Section 15 as can be seen is the charging section. But that is only for the purpose of charging to tax. The learned Departmental Representative submitted that Section 16 merely referred to the computation. However, in order to find out whether the aforesaid proviso is applicable or not we have to make the computation. How are we to find out whether for the purpose of said Sub-clause (iia) and the aforesaid proviso the salary exceeded Rs. 20,000 or not except by computing it ? Therefore, the method of computation under Section 16 has to be applied. That section does not state that it is merely for the purpose of calculating the tax payable by a salaried employee. IT uses the expression "income chargeable under the head salaries" which is used in the aforesaid proviso. Therefore, in order to find out whether the salary exceeded Rs. 20,000 or not the standard deduction has to be taken into account. That being so, the assessee is entitled to the benefit of Section 36(iia).


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