COMMISSIONER OF INCOME TAX Vs. P ARANGASAMY

JUDGEMENT

(1.) THE common question that arises for our consideration in all these tax cases is as to whether the incentive bonus and the additional conveyance allowance paid to the Development Officers of the Life Insurance Corporation of India form part of their salary and are liable to be assessed to tax as salary.

(2.) THIS court in the case of CIT v. E. A. Rajendran [1999] 235 ITR 514, has held that in the absence of any notification issued by the Central Government under Section 10(14)(i) granting exemption the incentive bonus and additional conveyance allowance are liable to be assessed to tax as salary. THIS court also held that such bonus and the additional allowance are part of the salary of the employee having regard to the terms used in Sections 16 and 17 of the Income-tax Act, 1961.

(3.) THE materials placed before the court by the respective counsel show that the Development Officers are whole time employees of the Life Insurance Corporation of India, who are required to discharge the duties and obligations which, inter alia, include the development of the life insurance business of the Corporation. THE very first duty enumerated for the Development Officer is "to develop, to increase the production of new insurance business in the planned way as far as may be practicable in the area that may be allotted to him from time to time". THE other duties and obligations include the duty to supervise and to guide the activities of agents placed under the supervision of the Development Officers, to recruit new agents so as to develop agency force and to act generally in such a way as to activate existing agents and to motivate new agents and to render certain services to policy holders. THE officer is also required to perform such other duties that are entrusted or assigned to him from time to time.