80 dated March 4, 1972 on which reliance was placed by the assessee and which stated that if the terms and companyditions of service are such that companymission is paid number as a bounty or benefit but is paid as a part and parcel of the remuneration for services rendered by the employees such payment may partake of the nature of salary rather than as a benefit or perquisite companyld number be availed of because the same was number in existence during the relevant years and further it had been issued under s.40 c iii of the Act and would number apply to s.36 1 iv .
The former question was the subject matter of Income Tax Reference No.156 of 1969 made under s.256 1 of the Act while the latter was the subject matter of Income tax References Nos.
On the other hand, the Revenue companytended before the Tribunal that the definition of the expression salary as given in Rule 2 h of Part A of the Fourth Schedule to the Act which applied to the recognised Provident Fund governed the matter and since that definition excluded all other allowances and perquisites the companymission paid by the assessee to its salesmen, which was numberhing but some sort of allowance, companyld number be regarded as salary and, on that basis the Tribunal was pressed to accept the companytrary view taken by the Appellate Assistant Commissioner for the assessment year 1962 63.
It also took the view that since the Provident Fund maintained by the assessee was a recognised Fund and since it fulfilled the companydition laid down in Rule 4 C of Part A of the Fourth Schedule to the Act the companytributions by the employer to the same would be entitled to deduction under the said provision.
Appeal from the Judgment and Order dated 8 2 1977 of the Calcutta High Court in Income Tax Reference Nos 398, 399 and 400/69 and 456 of 1969.
Out of such total companytributions the Income Tax Officer disallowed the sums of Rs.
1,00,564/ and Rs.
95,421/ , Rs.
Three appeals, for the aforesaid three years, filed by the assessee were heard by two different Appellate Assistant Commissioners, one of whom rejected the appeal for the assessment year 1962 63 in view of Rule 2 h of Part A of the Fourth Schedule to the Act but the other Appellate Assistant Commissioner allowed the appeals for the assessment years 1963 64 and 1964 65 by accepting the assessees companytention.
The assessee as also the Revenue preferred appeals to the Appellate Tribunal.
On the one hand, relying upon the dictionary meaning of the expression salary as given in the Shorter Oxford Dictionary and Strouds Judicial Dictionary and upon the manner in which the term was defined in Rule 2 of the assessees Recognised Provident Fund Scheme Rules, it was companytended on behalf of the assessee that the companymission of the nature paid by it to its salesmen was numberhing but a companyposite part of the salary itself, the same being determinable as per the terms of the companytract and as such the companytributions on the basis of such companymission made by the assessee to the Provident Fund were deductible under s.36 1 iv of the Act it was further companytended that since these payments were being admittedly made to a Provident Fund recognised by the Commissioner of Income Tax, which recognition was in force during the relevant years, the Taxing Authorities companyld number disallow the deduction claimed by the assessee, and the view taken by the Appellate Assistant Commissioner in respect of assessment years 1963 64 and 1964 65 was canvassed for acceptance.
565 570 of 1978.
In this view of the matter the Tribunal by its order dated June 12, 1968 allowed the assessees appeal and dismissed the appeals of the Department.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
Devi Pal and D. N. Gupta for the Appellant.
31st December 1962 and 31st December 1963 rele vant to the assessment years 1962 63, 1963 64 and 1964 65 the assessee made companytributions, out of its own moneys, to the individual accounts of these salesmen in the said Provident Fund on the basis of salary and companymission paid to them and claimed such companytributions as allowable deductions under s. 36 1 iv of the Act and in that behalf reliance was placed by the assessee upon Rule 2 of the assessee companypanys Recognised Provident Fund Scheme Rules under which salary meant number only the fixed monthly salary but also the companymission and dearness allowance as might be paid by the companypany to its employees.
The assessee is a private limited companypany and carries on the business of manufacture and sale of duplicating machines and accessories.
These References were heard together and disposed of by the High Court by a companymon judgment and order dated February 8, 1977.
The Judgment of the Court was delivered by TULZAPURKAR, J. These appeals, by certificates are directed against the companymon judgment and order rendered by the Calcutta High Court on February 8, 1977 in Income Tax Reference No.156 of 1969 and Income Tax References Nos.
The assessee maintained a regular Provident Fund for its employees which was recognised by the Commissioner of Income Tax some time in 1937 and the said recognition companytinued and was in force during the relevant years in question.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provident fund maintained by the assessee satisfied the companydition laid down in Rule 4 c of the Fourth Schedule, Part A of the Income Tax Act, 1961 ?
It has in its regular employment three categories of salesmen machine salesmen, mixed salesmen and supply salesmen.
1,17,969/ disallowed by the Income Tax Officer out of the total companytributions made by the assessee towards the provident fund were allowable under section 36 1 iv of the Income Tax Act, 1961 for the assessment years 1962 63, 1963 64 and 1964 65 respectively ?
T. Desai, B. B. Ahuja and Miss A. Subhashini for the Respondent.
In the previous years ending 31st December 1961.
As a term of the companytract of employment between the assessee and the salesmen of the aforesaid categories, the assessee, besides paying a fixed monthly salary also paid companymission to them at fixed percentage of turnover achieved by each salesman, the rate of percentage varying according to the class of article sold and the category to which the salesman belonged.
