Orissa High Court
Commissioner Of Income-Tax vs Sri Anil Singh on 21 June, 1995
JUDGMENT
1. The present reference at the instance of the Commissioner of Income-tax, Orissa, has raised the following question :
"The Tribunal having held that the commission receipt was assessable as salary under Section 16, whether, on the facts and in the circumstances of the case, the Tribunal was justified in further holding that a part of such commission was exempt under Section 10(14) of the Act ?"
2. The facts of the case reveal that the assessee worked as a supervisor in Indian Sewing Machine Co. Ltd., Bhubaneswar. He was paid salary at the rate of Rs. 300 per month and in addition to that he also derived commission at Rs. 44,283 for the assessment year 1982-83 and Rs. 18,852 for the assessment year 1983-84. The assessee claimed deductions of Rs. 20,640 for the assessment year 1982-83 and Rs. 10,255 for the assessment year 1983-84 out of his commission income on the basis that he had incurred actual expenses for earning this income. The Income-tax Officer rejected his claim. On appeal, the Appellate Assistant Commissioner held that a deduction at the rate of 30 per cent. of the commission earned should be allowed after allowing the deduction under Section 16(1) of the Income-tax Act, 1961. The Tribunal, relying on the decisions of the Income-tax Appellate Tribunal, Hyderabad Bench, held that the assessee was entitled to deduction of 30 per cent. of the commission and confirmed the order of the Appellate Assistant Commissioner. The point arising in this case is well covered by an earlier decision of this court in CIT v. Bijay Kishore Kapoor [1993] 202 ITR 129, wherein it has been held that in terms of Clause (iv) of Section 17 of the Income-tax Act, 1961, "salary" includes any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages. Section 17 contains definitions within a definition. For the purposes of the section, there is no difference between commission which is wholly dependent upon work done and fixed salary on a. periodic footing. It has further been held that the terms of engagement clearly reflected the relationship between the employer and employee. The employer itself considered the payment as salary and made deductions under Section 192 while making the payment. The commission received by the assessee was assessable as income from salary and deduction at the rate of 30 per cent. could not be allowed on account of expenses.
3. Following the ratio of the aforesaid decision, the references are answered in favour of the Revenue and against the assessee.