COMMISSIONER OF INCOME TAX Vs. G N BADAMI

JUDGEMENT

(1.) THIS is a combined reference both at the instance of the assessee and at the instance of the Revenue. The Income-tax Appellate Tribunal has stated a case and referred the following questions of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act), for our opinion for the assessment year 1977-78.

(2.) QUESTION of law at the instance of the assessee :

(3.) WE have carefully considered the submissions of learned counsel for the assessee and learned counsel for the Revenue. Before considering the rival submissions, it is necessary to notice the relevant provision of the Act. Section 15 of the Act deals with the charge to income-tax on income falling under "salaries". Section 16 provides for deduction from salaries and section 17 defines the expression, salary and under clause (1) of section 17, salary includes wages, any annuity or pension, any gratuity, any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages. The expression, "profits in lieu of salary" is defined in clause (3) of section 17 of the Act. Clause (3) of section 17 of the Act reads as under :