COMMISSIONER OF INCOME-TAX Vs. MANUBHAI M. PATEL

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Ahmedabad Bench 'B', has made this reference under Section 256(1) of the Income -tax Act, 1961 (hereinafter referred to as 'the Act' for short), for the opinion of this Court on the following question, which arises out of I. T. Appeal No. 121/ Ahd/1991 pertaining to the assessment year 1989 -90: Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the officer was not justified in disallowing deduction claimed by way of adjustment under Section 143(1)(a) of the Act?

(2.) FROM the facts, it appears that the assessee, who was working as a Development Officer of the Life Insurance Corporation of India, had filed his return for the year 1989 -90, showing total income of Rs. 18,260. The Assessing Officer, by adjustment explanatory sheet, adjusted Rs. 34,562 disallowing the conveyance allowance of Rs. 18,819 and Rs. 4,700 by disallowing the incentive bonus of Rs. 11,578 and assessed the income at Rs. 52,822. The assessee moved an application under Section 154 of the Act for rectification as deduction of conveyance allowance and incentive bonus was not to be carried out, the application was partly allowed vide order dated February 12, 1990, the conveyance allowance of Rs. 18,820 disallowed earlier was allowed to be deducted out of the total income, but, the deduction from the incentive bonus remained untouched. The assessee, being aggrieved by the said order, filed an appeal to the Deputy Commissioner of Income -tax (Appeals) and submitted that to the extent of 40 per cent., the Assessing Officer should have allowed the application. The contention of the assessee before the Deputy Commissioner of Income -tax (Appeals) was that different Benches of the Tribunal and some of the High Courts had taken the view that at least to the extent of 40 per cent, of the incentive bonus should be allowed to be deducted from the total income. The appeal was dismissed, therefore, the assessee took up the matter before the Tribunal.

(3.) SHRI Bhatt, learned Counsel for the Revenue, submits that the Tribunal was unjustified in holding that the total inclusion was bad. According to him, at least to the extent of 40 per cent, or in accordance with the judgment of this court, deduction to the extent of 30 per cent, only could be allowed and not beyond that. His submission is that the Tribunal could not make an absolute order in favour of the assessee.