revenue is aggrieved against order of Commissioner (Appeals) holding that privilege leave was neither salary nor perquisite. 2. assessee is private limited company carrying on business as commission agent of vegetable oil. It paid its commercial manager, Shri S.K. Kejriwal, salary at rate of Rs. 4,075 per month amounting to Rs. 44,825 for period 1-7-1977 to 30-11-1977 and also paid Rs. 25,855 in lieu of privilege leave. ITO held that salary as well as payment in lieu of privilege leave totalling Rs. 70,680 was in excess of limit of Rs. 5,000 per month under section 40A(5)(c) of Income-tax Act, 1961 ('the Act'). He, accordingly, disallowed Rs. 10,680 (after allowing salary for twelve months though Kejriwal was employed for eleven months). 3. Commissioner (Appeals), following CIT v. Manjushree Plantations Ltd. [1980] 125 ITR 150 (Mad.), held that payment in lieu of privilege leave of Rs. 25,855 was neither salary nor perquisite and, therefore, was not hit by section 40A(5). He, accordingly, deleted Rs. 10,680. 4. revenue is in appeal before us. We accept revenue's contention that while there is authority for holding that cash payments are part of salary and not perquisite, there is no authority for proposition that cash payments are not salary. If this argument was accepted then even payment of salary in cash would amount to absurd proposition that such payments are not assessable under head 'Salaries'. Madras High Court in Manjushree Plantations Ltd.'s case, relying on CIT v. Kanan Devan Hills Produce Co. Ltd. [1979] 119 ITR 431 (Cal.), held that cash payments are not perquisites within meaning of section 40(c)(iii) of Act. Similar view has been taken by Karnataka High Court in CIT v. Mysore Commercial Union Ltd. [1980] 126 ITR 340, by Bombay High Court in CIT v. Indokem (P). Ltd. [1981] 132 ITR 125, by Calcutta High Court in Indian Leaf Tobacco Development Co. Ltd. v. CIT [1982] 137 ITR 827 and by Andhra Pradesh High Court in CIT v. Warner Hindustan Ltd. [1984] 145 ITR 24. All these High Courts have held that cash payments are part of salary. contrary view has been taken by Kerala High Court in Full Bench decision in CIT v. Commonwealth Trust Ltd. [1982] 135 ITR 19, where they have held that undue emphasis has been given by other High Courts on expression 'whether convertible into money or not' and restricted meaning is assigned to term 'benefit, amenity or perquisite' and that such construction was irrational and therefore, cash payments will not take payment out of purview of 'benefit, amenities or perquisites'. only conclusion that can be arrived at from above discussion is that majority of High Courts have held that cash payment is not perquisite. 5. Insofar as Tribunal had held in Manjushree Plantations Ltd.'s case, as referred in High Court's order, that cash payment is not salary, said view is patently erroneous as discussed above. Tribunal, Special Bench, Bombay, in Blackie & Sons (India) Ltd. v. ITO [1983] 3 SOT 72 in para 19 had clearly held that cash payments, though not perquisites, were assessable as salary. whole argument that cash payments were not perquisites started w i t h premise that cash payments were covered under 'Salaries' and, therefore, Legislature never intended it to be treated as perquisite. 6. From above discussions, it is clear that Commissioner (Appeals) had gone wrong in holding that amount paid in lieu of privilege leave was not part of salary. He was right only to extent that it was not perquisite which view is in accordance with view held by majority of High Courts. 7. assessee, however, raised alternative contention before us, on which he succeeds. contention is based on decision of Tribunal, Madras Bench, in N.B. Tendolkar v. ITO [1980] 19 CTR (Mad.-Trib.) 27, where it was held that amount received by employee on his retirement attributable to accumulated leave due to him would not form part of his income chargeable under head 'Salaries' and that entitlement to claim salary for leave and benefit of leave itself were in nature of capital assets which was not payment attributable to services rendered. We find that Kejriwal had left service of assessee-company in beginning of December 1977 when he was paid Rs. 25,855 in lieu of privilege leave. Thus, assessee's case falls within ratio of N.B. Tendolkar's case. 8. Tribunal, Madras Bench 'B', in T. V. Hindojha [1983] TTJ (Mad.) 192 took view that even payment received on encashment of earned leave during service period was not assessable under head 'Salaries' because amount was received as compensation in return for surrender of leave and was not received for any services rendered and was, therefore, exempt from tax. Similar view was taken by Hyderabad Bench in ITO v. A.N. Mathur [1983] 71 Taxation (6) 110 (Hyd.). Tribunal, Delhi Bench 'C', in B.N. Poddar [Appeal No. 1606 (Delhi) of 1983] by order dated 23-3-1984 (to which one of us was party) had followed aforesaid decisions. 9. Respectfully following aforesaid decisions, we hold that encashment of privilege leave did not fall under head 'Salaries' as defined in section 17 of Act nor under Explanation 2(a) to section 40A(5). Thus, encashment of privilege leave has to be excluded for computation of disallowance under section 40A(5). We, accordingly, uphold order of Commissioner (Appeals), though for different reasons. 10. In result, revenue's appeal is dismissed *** INCOME TAX OFFICER v. PUNJAB MERCANTILE AND TRADERS LTD