Andhra Pradesh H.C : The petitioner who is a development officer employed by the Life Insurance Corporation of India received a sum of Rs. 9,536 from his employer by way of incentive bonus during the previous year relevant to the asst. yr. 1981- 82.

Counsel Appeared

I. Venkatanarayana, for the Petitioner : M.S.N. Murthy, for the Respondents

UPENDRALAL WAGHRAY, J.:

The petitioner who is a development officer employed by the Life Insurance Corporation of India received a sum of Rs. 9,536 from his employer by way of incentive bonus during the previous year relevant to the asst. yr. 1981- 82. In his return filed under the IT Act, he claimed a deduction of Rs. 4,768 by way of expenses in earning the said incentive bonus. The ITO declined to give the deduction claimed on the ground that the incentive bonus was a part of the salary for which standard deduction was allowed. This order was confirmed by the appellate authority as well as the CIT in revision. Thereafter, the petitioner has filed this writ petition seeking a direction that the incentive bonus shall not be included as a part of his salary during the said and the subsequent assessments.

2. The contention of the petitioner is that the incentive bonus does not form part of the salary and has to be treated as income from profession for earning which the expenses incurred shall be allowed as a deduction. Before the authorities under the IT Act, a decision of the Tribunal, Chandigarh Bench, was relied upon which was not accepted by them. It is contended by counsel for the Revenue that the incentive bonus paid to the petitioner as an employee is nothing but part of his salary. The definition of “salary” under s. 17 of the IT Act is wide enough to include the incentive bonus paid to an employee. The circumstance that, under s. 36(1), sub- cl. (ii), such a payment is given as a deduction to the employer also will not militate against the fact that the incentive bonus forms part of the salary. The petitioner could not have earned this amount if he were not in the employment of the Life Insurance Corporation. In support of this contention, a decision of the Supreme Court in Gestetner Duplicators (P) Ltd. vs. CIT (1979) 8 CTR (SC) 371 : (1979) 117 ITR 1 (SC) : TC 15R.1187 was relied upon. This Court also, in the decision in M. Krishna Murthy vs. CIT (1985) 152 ITR 163 (AP) : TC58R.333, has taken a similar view in respect of incentive bonus while considering the applicability of s. 40A of the IT Act. The Allahabad High Court has also in the decision reported in CIT vs. Hind Lamps Ltd. (1980) 122 ITR 451 (All), taken a similar view about incentive bonus being a part of salary. We are unable to say that the incentive bonus received by the petitioner is nothing else but what an employee has received from the employer. The definition of “wages” under the Payment of Wages Act, 1936, also indicates that bonus is included in the said definition. Having regard to the language of s. 17 of the IT Act and the circumstance that the petitioner has received the said amount as incentive bonus while in employment, we do not consider that the contention of the petitioner has any merits.

3. The writ petition is, therefore, dismissed. We make no order as to costs.

[Citation :183 ITR 29]