High Court Of Madhya Pradesh
CIT vs. Gurudeo Singh Jaggi
Section 15, 16
Asst. Year 1994-95
Dipak Misra & A.K. Shrivastava, JJ.
IT Appeal No. 56 of 2000
9th May, 2003
ORDER
BY THE COURT :
The appellant named above begs to submit as under : Regarding the asst. yr. 1994-95 the return of the assessee was processed under s. 143(1)(a) on 20th March, 1995, wherein the total income determined was Rs. 72,230 as against Rs. 65,346 declared by the assessee in the return. The AO added an amount of Rs. 6,884 on account of excess deduction claimed out of incentive bonus. A copy of the aforesaid order passed by the AO dt. 20th March, 1995 is filed herewith as Annexure
2. This is an appeal under s. 260A of the IT Act, 1961. This Court at the time of admission had framed the following question of law : “Whether the learned Tribunal is justified in setting aside the orders passed by the lower authorities disallowing the assessee’s claim of deduction towards conveyance allowance and addl. conveyance allowance and while doing so, whether the learned Tribunal has correctly interpreted the provision of ss. 16, 17 and 10(14) of the IT Act ?”
3. In course of hearing the learned counsel for the parties very fairly agreed that another question of law does emerge in this case. The said question “reads as under : “Whether the respondent was entitled to any deduction as per actual expenditure incurred out of the incentive bonus paid to him by the employer, namely, LIC ?”
4. The facts which are necessary to be stated here are that the respondent is a Development Officer in the LIC of India. For the asst. yr. 1994-95 he was given certain benefits with regard to the conveyance allowance and addl. conveyance allowance. That apart there was also claim with regard to the benefit of sum towards incentive bonus. The AO finally allowed the deduction of the incentive bonus on the basis of the actual expenditure. The adjustment made by the AO under s. 143(1)(a) was accepted by the assessee. Later on the AO reopened the assessment on the ground that there was escapement of income to the extent of Rs. 27,539 i.e., the deduction allowed in respect of incentive bonus. The assessee feeling aggrieved by the order preferred an appeal before the CIT, Gwalior. Being unsuccessful there he approached to the Tribunal. The Tribunal in para 5 held as under : 5. I have carefully considered the arguments of both the sides and have perused the material placed before me. As per s. 147 as amended w.e.f. 1st April, 1989, the AO is empowered to open reassessment under s. 147 if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. Thus, even under the new provision, it is necessary that the AO should have reason to believe that any income chargeable to tax has escaped assessment. In this case, the AO had allowed the deduction of Rs. 27,539 for earning incentive bonus. In the case of Shri S.N. Mishra (supra), the Tribunal, Jabalpur Bench has come to the conclusion that the actual expenditure incurred out of incentive bonus is to be allowed. In this case, the assessee had incurred the actual expenditure of Rs. 27,789, while the deduction allowed was only Rs. 27,539. Thus, it cannot be said that any income had escaped assessment. Therefore, in my opinion, it was not a fit case for reopening under s. 147. Hence I quash the initiation of proceedings under s. 147 and consequently the assessment order dt. 10th Sept., 1998, is quashed restoring the original intimation under s. 143(1)(a) dt. 20th March, 1995. Since I have quashed the order of reassessment, the various other grounds of appeal by the assessee need no adjudication.”
5. This Court recently in the case has held that the assessee is entitled to get conveyance allowance and addl. conveyance allowance as incurred by him. As far as expenditure relating to incentive bonus is concerned this Court in ITA. No. 19/1999 and other connected appeals has held that deduction on that score is impermissible.
6. In view of this we are of the considered opinion that the order of the Tribunal is bound to be set aside and is accordingly set aside.
7. The appeal is accordingly disposed of.
[Citation : 267 ITR 763]
