Allahabad H.C : The incentive bonus paid to Development Officer of LIC of India is not chargeable to the tax under the head ‘Salary’

High Court Of Allahabad

CIT vs. M.S. Bagga

Section 16, 17(1)(iv)

Asst. Year 1984-85, 1985-86

R.K. Agrawal & Prakash Krishna, JJ.

IT Ref. No. 95 of 1993

15th March, 2005

Counsel Appeared :

A.N. Mahajan, for the Revenue : R.S. Agrawal, for the Assessee order

By the court :

The Tribunal, Allahabad, referred the following questions of law under s. 256(1) of the IT Act, 1961 (hereinafter referred to as ‘the Act’) for opinion to this Court :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the incentive bonus paid to Development Officer of LIC of India is not chargeable to the tax under the head ‘Salary’ ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the incentive bonus earned by Development Officer of LIC is business income and expenditure incurred in earning incentive bonus is an allowable deduction ?”

2. The present reference relates to the asst. yrs. 1984-85 and 1985-86.

3. Briefly stated the facts giving rise to the present reference are as follows : The respondent-assessee is a Development Officer in LIC of India, Kanpur. He has received incentive bonus and also incurred certain expenditure which he claimed as deduction. The ITO treated incentive bonus as a part of the salary and disallowed the claim of expenditure. However, the Tribunal has held that the expenditure incurred in earning incentive bonus is allowable as deduction.

4. We have heard Sri A.N. Mahajan, learned standing counsel for the Revenue and Sri R.S. Agrawal, learned counsel appearing for the respondent-assessee.

5. In view of the decision of this Court in CIT vs. Ganesh Chand Saxena (IT Ref. No. 30 of 1989, dt. 22nd Dec.,2004) [reported at (2005) 198 CTR (All) 620—Ed.], similar question has been answered in favour of the Revenue and against the assessee. We, accordingly, answer both the questions referred to us in the negative, i.e., in favour of the Revenue and against the assessee. However, there shall be no order as to costs.

[Citation : 284 ITR 577]

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