EMIL WEBBER versus COMMISSIONER OF INCOME TAX, V AND M, NAGPUR

Citation: [1993] 2 S.C.R. 27 · Decided: 19-02-1993 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Dismissed

Judgment (excerpt)

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EMIL WEBBER 
A 
v. 
COMMISSIONER OF INCOME TAX, V AND M, NAGPUR 
FEBRUARY 19, 1993 
[B.P. JEEVAN REDDY AND N. VENKATACHALA, JJ.] 
B 
Income Tox Act, 1961 : Sections 2(24), 14, 17, 56, 195-'fl!come'-
Meaning of-Amount paid by way of tox on the salary amount of assessee 
on his behalf-Whether assessee's Income-Whether taxable under the head-
ing "other sources". 
Ballarpur, a public limited company undertook to set up a caustic 
soda/chlorine manufacturing plant. It entered into an agreement with a 
French concern for purchase of certain machinery and equipment. 
c 
In another agreement with Ballarpur, the French concern agreed to D 
provide services of certain personnel and Ballarpur agreed to pay salaries 
and other emoluments free of any Indian tax or duty to the personnel. 
The French concern entered into an arrangement with a Swiss 
concern for supply of certain machinery and to make available services of 
certain personnel. 
The assessee-appellant was one such person. He came to India and 
started working in connection with the setting up of the plant. 
E 
In addition to daily allowances and other facilities, the assessee-ap-
pellant was paid Rs. 3,82, 481 and Rs. 67,200 for the assessment years, 
F 
1974-75 and 1975-76, respectively. 
Before the Income Tax OOicer, the assessee contended that he was 
not liable to pay tax. The J.T.O. did not agree. Ballarpur paid the tax 
amount of Rs. 3,23,400 and Rs. 35,546 for the assessment years respective-
~ 
G 
The Income Tax OOicer treated the tax amount paid by Ballarpur 
as a p·-rquisite and added the same to the salary .amount of the assessee. 
The assessee questioned the action of the I.T.O. in appeal before the 
A.A.C., which was dismissed. 
H 
27 
28 
SUPREME COURT REPORTS 
[1993) 2 S.C.R. 
A 
The appeal filed before the Tribunal was also dismissed, whereupon 
V 
B 
the assessee obtained a reference to be answered by the High Court. 
The High Court answered the reference, "whether on the facts and 
in the circumstances of the case the amount of tax paid by Ballarpur on 
behalf of the assessee in assessment years 1974· 75 and 1975-76 is income 
taxable under the heading 'other sources'," against the assess.,e. 
Hence these appeals by the assessee contending that the amount paid 
by way of tax could not be treated as 'Income' of assessee; that as the 
assessee did not receive. the said amount from Ballarpur, i,t could not 
C constitute his income. 
Dismissing the appeals, this Court, 
HELD: 1.01. The definition of 'Income' in clause (24) of Section 2 of 
the Act is an inclusive definition. It adds several artificial categories to the 
D concepl. of income but on that account the expression 'income' does not 
lose its natural connotation. It is repeatedly said that it is difficult to define 
the ~xpression 'income' in precise terms. Anything which can properly be 
described as income is taxable under the Act unless, of course, it is 
exempted under one or the other provision of the Act. [310) 
E 
. F 
1.02. The amount paid by Ballarpur by way of tax on the salary 
amount received by the assessee can be treated as the income of the 
assessee. The said amount is. nothing but a tax upon the salary received 
by the assessee. By virtue of the obligation undertaken by Ballarpnr to pay 
tax on the salary received by the assessee among others, it paid the said 
tax. The said payment'is, therefore, for and on behalf of the assessee. It is 
not a gratuitous payment. But for the said agreement and but for the said 
payment, the said tax amount would have been liable to be paid by the 
assessee himself. He could not have received the salary which he did but 
for the said payment of tax. The obligation placed upon Ballarpur by virtue 
G of Section 195 of the Income Tax Act cannot also be ignored in this context. 
It would be unrealistic to say that the said payment had no integral 
\connection with the salary received by the assessee. [31E·G] 
1.03. Inasmuch as the assessee is not an employee of Ballarpur, 
which made the payment, it cannot be brought within the purview of 
H Section 17 of the Act. It must necesarily be placed under sub·sectiou (1) 
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EMIL WEBBER v. CIT, NAGPUR [JEEV AN REDDY, J.] 
29 
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of Section 56, 'income from other sources'. According to the said sub-sec-
A 
tioa, income of every kind which is not to be excluded from the total income 
under the Act shall be chargeable to income tax under the head 'income 
from other sources', if it is not chargeable

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