Report No. 12
123. Tax on compensation.-
(1) Where the total income of an assesses includes any compensation or other payment which is chargeable as the profits and gains of a business carried on by the managing agent, manager or other person, as the case may be, under the provisions of section 28(h), (a), (b), (c) and (d) [10(5A) opening lines, clauses (a) (b) (c) (d) and last para., earlier half], the tax payable by him on his total income shall, if he so elects, be-
(i) the income-tax payable on his total income as reduced by the amount of such compensation or other payment, at the average rate of income-tax,
(ii) the super-tax payable on his total income as reduced by the amount of such compensation or other payment, at the average rate of super-tax, and
(iii) the tax on such compensation or other payment at the average of the average rates of income-tax and super-tax applicable to his total income for the three assessment years immediately preceding the assessment year.
[Section 10(5A) last para, latter half]
Explanation.-For the purposes of determining the average under clause (iii), the rates of income-tax and super-tax applicable for any assessment year preceding the assessment year shall, where the assessee had been assessed as a registered firm, be the rates applicable for such assessment year to an unregistered firm having the same total income as that declared by the assessee for such assessment year.
[New]
(2) Where an assesses is a partner of a registered firm or an unregistered firm assessed as a registered firm under the provisions of section 190(b) [23(5)(b)], and such firm is in receipt of any such compensation or other payment, the tax payable by him on his total income shall, if he so elects, be-
(i) the income-tax payable on his total income as reduced by the amount of his share in such compensation or other payment, at the average rate of income-tax,
(ii) the super-tax payable on his total income as reduced by the amount of his share in such compensation or other payment, at the average rate of super-tax, and
(iii) the tax on his share in such compensation or other payment at the average of the average rates of income-tax and super-tax applicable to his total income for the three assessment years immediately preceding the assessment year.
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