COMMISSIONER OF INCOME TAX Vs. SHIV RAJ BHATIA

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, under Section 256(1) of the Income-tax Act, 1961, in the case of the assessee for the assessment year 1986-87, referred the following question of law for the opinion of this court :

(2.) THE assessee was working as the Development Officer with the Life Insurance Corporation of India. During the previous year relevant to the assessment year 1986-87, the assessee received a sum of Rs. 68,206 as incentive bonus from the Life Insurance Corporation and he claimed 40 per cent, deduction (Rs. 27,282) on this incentive bonus. THE Income-tax Officer, Sirohi, by his order dated March 24, 1987, relying upon the judgment of the Jaipur Bench of the Tribunal in ITA No. 490/JP of 1994 (ITO v. K. M. Baheti) disallowed this claimed deduction. While disallowing the deduction, the Assessing Officer held that the incentive bonus received by the assessee is a part of the salary in the hands of the assessee and no deduction is permissible since the standard deduction under Section 16(i) of the Act has already been allowed. THE Income-tax Officer further held that the assessee is an employee of the Life Insurance Corporation of India and any receipt by the assessee from the Life Insurance Corporation of either nature will be included and taxed under the head "Income from salary" under Section 15 of the Act.

(3.) LEARNED counsel for the assessee has also raised three preliminary objections that (i) no question of law arises in the matter and the findings arrived at by the Tribunal are purely findings of facts and the Revenue never contested nor raised the ground as to under which head the incentive bonus can be charged to tax ; (ii) the tax effect in the present reference is below Rs. 30,000 and, therefore, as per the policy decision of the Central Board of Direct Taxes, no question of law is to be raised at the instance of the Revenue ; and (iii) the Tribunal has not given any finding : whether the income was from business or from profession. LEARNED counsel for the assessee, therefore, prayed that the reference may be returned unanswered. In support of his contention, learned counsel for the assessee has placed reliance over : CIT v. A. A. Baniyan [1992] 197 ITR 717 (Bom), CIT v. M. C. Shah [1991] 189 ITR 180 (Bom), CIT v. ITAT [1992] 196 ITR 683 (Orissa) and CIT v. Sarat Ch. Sahu [1992] 195 ITR 364 (Orissa).