COMMISSIONER OF INCOME TAX Vs. PANKAJ DHIRAJLAL DHRUVE

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, Ahmedabad Bench 'c' has referred the following question under section 256 (2) of the Income Tax Act, 1961 (the Act) at the instance of the Commissioner of Income Tax.

(2.) THE Assessment Year is 1991-92. The relevant accounting period is Financial Year ended on 31. 03. 1991. While finalising assessment u/s. 143 (3) of the Act on 09. 10. 1991 the Assessing Officer computed the total income of the assessee, an LIC Agent, at a sum of Rs. 2,51,332/ -. In the process the Assessing Officer allowed deduction of Rs. 65,718/- @ 40% on the commission for the first year and Rs. 22,793/- @ 15% on renewal commission from gross commission received by the assessee from LIC.

(3.) THE Commissioner of Income Tax, Rajkot (the CIT) initiated action u/s. 263 of the Act by issuing show cause notice. After considering the reply tendered by the assessee the assessment order was set aside and the Assessing Officer was directed to grant deduction to the assessee pegged at a sum of Rs. 10,000/- on the basis of circular issued by Central Board of Direct Taxes (CBDT) as the assessee was not maintaining the books of accounts though the total receipts were more than Rs. 60,000/ -.