INCOME TAX-IMPORTANT CASES

IMPORTANT INCOME TAX CASES

VIVEK SAWHNEY,VICE PRESIDENT

JAB WE MET CA
Employer-employee relationship:
The nature and extent of control which is the basis requisite to establish employer- employee relationship would vary from business to business. The test which is uniformly applied in order to determine the relationship is the existence of a "right to control" in respect of the manner in which the work is to be done. (Dharangadhra Commercial Works v State of Saurashtra 1957 SCR 152)
House Rent Allowance(S.10(13A):

When commission is paid to a person based upon fixed percentage of turnover achieved by the employee it would amount to "Salary" for the purpose of Rule 2 (h) of part A of IV Schedule(Gestetner Duplicators vCIT 117 ITR 1 (SC)).

Deduction under S.80G:
By the very nature of calculation required to be made u/s 80G(4) it is necessary that all deduction under chapter VIA be first ascertained and deducted before granting deduction u/s 80G (Scindia Steam Navigation Co v CIT (1994) 75 Taxman 495(Bom))

Revised return
A belated return filed u/s 139(4) can not be revised u/s 139(5). ( Kumar J.C. Sinha v CIT (1996) 86 Taxman 122(SC)).
Return showing income below taxable limit: Is a valid return. (CIT v Ranchhoddas Karosands(1959(361ITR 869 (SC)).

Perquisite (S17):
One can not be said to allow a perquisite to an employee if the employee has no vested right to the same. (CIT v L.W. Russel(1964) 531 ITR 91 (SC)).

Reimbursement of expenses incurred by the employee has been intended to be roped in the definition of " Salary" by bringing it as part of " Profit in lieu of salary." (I.E . I Ltd. v CIT (!993) 204 ITR 386(Cal)