COMMISSIONER OF INCOME TAX Vs. SHEO RAJ BHATIA

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, for the assessment year 1985-86, in the case of the assessee, referred the following question of law, under Section 256(1) of the Income-tax Act, 1961, for the opinion of this court :

(2.) THE assessee was working as Development Officer in the office of the Life Insurance Corporation of India at Sirohi. During the assessment year 1985-86, the assessee, apart from the salary and other allowance, received an amount of Rs. 50,132 from the Life Insurance Corporation as incentive bonus. He claimed a deduction of Rs. 20,000, i.e., 40 per cent, of the incentive bonus as the expenses incurred by him to procure the incentive bonus. THE assessing authority, i.e., the Income-tax Officer, Sirohi, relying upon the judgment of the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, in the case of ITO v. K.M. Baheti (ITA No. 469/JP/ 84) held that the incentive bonus is to be treated as part of the salary and, therefore, only the standard deduction is allowable and the claim of the assessee for deduction on account of additional expenses to the tune of Rs. 20,000 cannot be allowed. Dissatisfied with the order dated January 27, 1986, passed by the Income-tax Officer, Sirohi, the assessee preferred an appeal before the Appellate Assistant Commissioner, Udaipur Range, Udaipur, who, by his order dated September 14, 1987, confirmed the disallowance made by the Income-tax Officer and dismissed the appeal filed by the assessee on this ground but partly allowed the appeal on other grounds.

(3.) CONSEQUENTLY, the reference is answered in the negative, i.e., in favour of the Revenue and against the assessee, and it is held that the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, was not justified in directing to allow 50 per cent. deduction of the incentive bonus received by the assessee from the Life Insurance Corporation of India, relying on the Board's circular which is applicable only to the Life Insurance Corporation of India's agents and not to the Development Officers and the case of Development Officers is governed by the Board's Instruction No. 1774.