LAWS(ORI)-1995-1-42

COMMISSIONER OF INCOME TAX Vs. GOVIND CHANDRA PANI

Decided On January 04, 1995
COMMISSIONER OF INCOME TAX Appellant
V/S
Govind Chandra Pani Respondents

JUDGEMENT

(1.) On an application being filed under Section 256(1) of the Income -tax Act, 1961, the Income -tax Appellate Tribunal has formulated the following questions for the opinion of this court : ' (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the incentive bonus received by the assessee can be assessed as income from profession and deduction at the rate of 40 per cent. be allowed on account of expenses ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee being an employee of the Life Insurance Corporation of India and deriving both salary and incentive bonus could not be assessed under Section 16 of the Income -tax Act, 1961, in respect of his incentive bonus receipt ? (iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right to endorse the view of the Appellate Assistant Commissioner of Income -tax in holding that the term 'salary' as defined in Section 17 would not include 'incentive bonus' ?'

(2.) QUESTIONS Nos. 2 and 3 are really one and the same question and, therefore, after hearing learned standing counsel for the Revenue, we reframe only one question in relation to questions Nos. 2 and 3 already, formulated by the Tribunal, the same being : ' Whether the incentive bonus which the assessee as the Development Officer gets from the employer, Life Insurance Corporation, can be held to be 'salary' within the ambit of Section 17 of the Income -tax Act and as such would be chargeable under the head 'salary' under Section 16 of the Act ?'

(3.) MR . Ray, learned standing counsel appearing for the Revenue, contends that the incentive bonus which is received by an employee of the Life Insurance Corporation is nothing but remuneration or recompense for the services rendered by the employee but is determined at a fixed percentage of the turnover achieved by him and, therefore, it partakes of the character of salary within the ambit of Section 17 of the Act. According to learned standing counsel, the definition of salary under Section 17 being an inclusive definition, it enlarges the meaning of the word 'defined' and the appellate authority was wholly in error in holding that the legislature having avoided the use of the word 'any bonus' in Section 17 is indicative of the legislative intent that bonus would not be a part of salary. The aforesaid contentions require a careful examination of the provisions of Sections 16 and 17 of the Act and the rules of interpretation in relation to the word 'includes' without use in interpretation Clause (sic).