COMMISSIONER OF INCOME TAX Vs. RAMLAL AGARWALA

JUDGEMENT

(1.) ON an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following :

(2.) THE assessee is a Development Officer of the Life Insurance Corporation. THE assessee claimed an amount of Rs. 23,871 as expenses against incentive bonus received as per separate profit and loss account. THE Assessing Officer rejected the claim of the assessee on the ground that the assessee is an employee and received the incentive bonus on account of an employee of the Life Insurance Corporation. When standard deduction under Section 16 has been allowed there is no question of further allowing 40 per cent, deduction from the incentive bonus. This view has been affirmed by the Commissioner of Income-tax (Appeals). In appeal before the Tribunal, the Tribunal has followed the decision of the Bombay High Court in CIT v. A. A. Baniyan [1992] 197 ITR 717 and further took the view that when two interpretations are possible, following the view taken by the apex court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192, the view favouring the assessee be taken.

(3.) THE same view has been taken by the Commissioner of Income-tax (Appeals) when the assessee is an employee of the Life Insurance Corporation and the standard deduction has been allowed under Section 16(i) of the Income-tax Act, 1961, and, when the bonus is paid for its extra work, that is nothing but in lieu of salary and that forms part of the salary. No extra deduction out of that amount is permissible.