COMMISSIONER OF INCOME TAX Vs. ANIL SINGH

JUDGEMENT

(1.) THE present reference at the instance of the CIT, Orissa, has raised the following question :

(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 asst. year 1982 83 and Rs. 18,852 for the asst. yr. 1983 84. The assessee claimed deductions of Rs. 20,640 for the asst. year 1982 83 and Rs. 10,255 for the asst. year 1983 84 out of his commission income on the basis that he had incurred actual expenses for earning this income. The ITO rejected his claim. On appeal, the AAC held that a deduction at the rate of 30 per cent of the commission earned should be allowed after allowing the deduction under S. 16(1) of the IT Act, 1961. The Tribunal, relying on the decisions of the Tribunal, Hyderabad Bench, held that the assessee was entitled to deduction of 30 per cent of the commission and confirmed the order of the AAC. The point arising in this case is well covered by an earlier decision of this Court in CIT vs. Bijay Kishore Kapoor (1993) 110 CTR (Ori) 142 : (1993) 202 ITR 129 (Ori), wherein it has been held that in terms of cl. (iv) of S. 17 of the IT Act, 1961, "salary" includes any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages. Sec. 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 S. 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.