High Court Of Punjab & Haryana
K.K. Kansal vs. CIT
Sections 15, 28, 234B, 234C, 260A
Asst. Year 1997-98
N.K. Sud & Adarsh Kumar Goel, JJ.
IT Appeal No. 157 of 2004
27th July, 2004
Counsel Appeared
P.C. Jain, for the Appellant
JUDGMENT
By the court :
This appeal has been filed by the assessee against the order of the ITAT, Delhi Bench, “SMC-II”, New Delhi (for short “the Tribunal”), dt. 17th Dec., 2003, for asst. yr. 1997-98.
Mr. P.C. Jain, learned counsel for the appellant, firstly challenged the finding of the Tribunal that the incentive bonus received by the assessee from the LIC was assessable under the head salary. Assessee is a development officer of the LIC. In addition to the salary, he also received incentive bonus from the LIC. Assessee claimed that the incentive bonus was assessable as business income and claimed various expenses as deductions against the said income. All the authorities below held that in the light of the law laid down by this Court in B.M. Parmar vs. CIT (1998) 150 CTR (P&H) 548 : (1999) 235 ITR 679 (P&H), incentive bonus was assessable under the head “Salary” and, therefore, the assessee was only entitled to claim standard deduction under the provisions of s. 16 of the IT Act, 1961. Accordingly, the assessee’s claim for treating incentive bonus as business income was rejected and consequently, the expenses claimed against the said income were not allowed as a deduction.
Learned counsel for the appellant states that the judgment of this Court in B.M. Parmar’s case (supra) was based on the interpretation of the scheme then in force. He contended that said scheme has come to an end and in its place a new scheme has been introduced. In view of the new scheme, the scope of which has further been explained in the two circulars issued by the CBDT, the judgment in B.M. Parmar’s case (supra) does not apply.
We are not inclined to accept this contention. At p. 691 of this report, their Lordships have observed as under :
“The first question which needs to be decided is whether incentive bonus was assessable as profits and gains of business or profession. There is no dispute about the fact that the development officers are wholetime employees of the LIC. They are employed for promoting and developing life insurance business. Their primary concern and functions are to secure more business for the LIC. It cannot, therefore, be said that while working in the field they are doing work in a different capacity. They go to the field through the insurance agents. Their status does not, therefore, change while working in the field for the purposes of getting more business for the LIC. In this situation, it cannot be said that the development officers are working in a different capacity while procuring more business. They might have professional expertise in the insurance business, but that would not change their status while they work in the field. They remain development officers in the employment of the LIC while working in the field also. Whatever income is received by the development officers from the LIC is by way of salary and is to be assessed under the same head. There is nothing on record to show that under the scheme of incentive bonus framed by the LIC in 1978, they were required to perform a duty different from the one for which they were appointed. In this light, the extra income earned by the development officers cannot be said to be assessable under the head “Profits and gains of business or profession”. A bare perusal of the above shows that it has been categorically held that the development officers are wholetime employees of the LIC who are employed for promoting and developing life insurance business. It cannot, therefore, be said that while working in the field they are doing work in a different capacity. It has also been held that whatever income is received by the development officers from the LIC is by way of salary and has to be assessed under the same head. It is also clear that this finding is not based on the interpretation of the scheme alone.
Since the matter is fully covered by the judgment of this Court, we are satisfied that the issue raised by the assessee does not give rise to any referable question of law for consideration by this Court.
The learned counsel then contended that the Tribunal was not justified in upholding the levy of interest under ss. 234B and 234C of the Act without appreciating the grounds raised before it. His contention is that there was no direction in the assessment order for levy of such interest and, accordingly, the AO could not charge the same while computing the tax liability. In our view, this is an arguable question of law.
Accordingly, this appeal is admitted for consideration of the following question of law : “Whether, on the facts and circumstances of the case, in the absence of any direction in the assessment order for levy of interest under ss.234B & 234C of the IT Act, 1961, the AO could charge such interest while computing the tax liability ?”
[Citation : 270 ITR 375]
