Assessee earned salary during FY 2007-08 Rs.4,56,821 however recovery of Rs .2,13,132 was made for excess salary payments relating to earlier years and net salary of Rs 243689 was received by the Assessee . How much is taxable salary during FY 2007-08 Rs 4,56,821 or Rs 243689 ?
Salary
Taxable Salary is Rs 243689
What is taxable under section 15 is “salary due” and not “salary accrued” salary is not taxable on “accrual” under section 15 since section 15 uses the words “salary due”. The salary is not to be taxed on the basis of “accrual” since, in it’s conscious choice of words, legislature has chosen the taxability on due basis or payment basis – whichever is earlier. The amount which constituted “salary due from an employer” was only the amount net of recovery, which the employer was legally empowered to make, in respect of excess payments made on account of wrong pay fixation
We hold so in the light of the law liad down by Honble Supreme Court which, as is elementary, binds all of us under Article 141 of the Constitution of India. If the assessee was entitled to receive only the net salary, net of recovery in respect of excess salaries received earlier, it cannot be said that the entire amount of salary, without such a recovery, was due to her. What was due to the assessee was the salary accrued during the year minus the excess salary received earlier.
The amount which constituted “salary due from an employer” was only the amount net of recovery, which the employer was legally empowered to make, in respect of excess payments made on account of wrong pay fixation.