COMMISSIONER OF INCOME TAX Vs. PATIL M D

JUDGEMENT

(1.) THE assessee is a Development Officer employed with the Life Insurance Corporation of India ('Corporation' for short). During the previous year pertaining to the asst. yr. 1983-84, he, apart from his other emoluments, had received a sum of Rs. 40,094 as incentive commission from the Corporation. At the time of assessment, he claimed 40 per cent. thereof, being Rs. 16,038, as permissible deduction. But the same was disallowed by the ITO on the ground that since incentive commission received by the assessee not being an income derived either from business or profession, no deduction, as claimed, is permissible therefrom. Accordingly, he added the incentive commission to his salary income and allowed only the standard deduction as contemplated under S. 16(i) of the IT Act, 1961 (In short, 'Act').

(2.) AGAINST the said assessment order, the assessee went in appeal before the AAC and succeeded in getting deduction of 40 per cent. as claimed. Aggrieved by the said order, the ITO went in appeal to the Tribunal, but it was in vain, since the Tribunal held that the assessee had received incentive commission in respect of the business canvassed by him and therefore, even if the said commission is held to be a part of his salary, only the met amount arrived at by allowing permissible deduction can be added to the income.

(3.) FOR answering the questions referred to us, we find it desirable first to ascertain the provisions and the purpose for which the incentive commissions/bonus is paid to the Development Officers.