COMMISSIONER OF INCOME-TAX VS S. L. SINGHAL, DEVELOPMENT OFFICER, 2000 PTD-PUNJAB-AND-HARYANA-HIGH-COURT-INDIA 3555 (1998)

Income-tax--

----Salary---Deductions---LIC---Incentive bonus received by Development Officer of LIC is assessable as salary--Standard deduction can be claimed from salary---Expenditure incurred by Development Officers is not deductible separately---Indian Income Tax Act, 1961, Ss. 15 & 16.

The incentive bonus received by the Development Officers of the LIC, is assessable under the head "salaries" and not under the head "profits and gains of business or profession". Deduction under section 16(i) of the Income Tax Act, 1961, is admissible under the head "salaries" and no separate deduction on account of expenditure is permissible.

B.M. Parmar, Development Officers, LIC of India v. CIT (1999) 235 ITR 679 (P&H) fol.

R.P. Sawhney, Senior Advocate and Rajesh Bansal for the Commissioner.

A.K. Mittal for the Assessee

JUDGMENT

N.K. AGRAWAL, J.---The following question of law has been referred by the Income-tax Appellate Tribunal under section 256(1) of the Income Tax Act, 1961 (for short, "the Act"), for the assessment years 1989-90 and 1990-91:

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in upholding the Deputy Commissioner of Income-tax (Appeals)'s order allowing deduction at 40 percent. out of incentive bonus received by the assessee who is a Development Officer of the Life Insurance Corporation of India?"

The assessee was employed in the Life Insurance Corporation of India as a Development Officer. He derived income from salary. He received certain amount by way of incentive bonus from his employer, namely, the Life Insurance Corporation. He sought deduction from the amount of incentive bonus on account of certain expenditures, which he claimed to have incurred in the performance of his duties in connection with his efforts for securing more insurance business during the year. The Assessing Officer declined to allow such deduction. However, standard deduction under section 16(i) of the Act was allowed.

This Court has examined a similar question of law in B.M. Parmar, Development Officer, L.I.C. of India v. CIT (1999) 235 ITR 679 (P&H) (I. T. Ref. Nos. 105 and 106 of 1986). It has been held on October 27, 1998, that incentive bonus is assessable under the head "salaries" and not under head "profits and gains of business or profession". It has been further held that deduction under section 16(i) of the Act is admissible under the head "salaries" and no separate deduction on account of expenditure is permissible.

Taking the same view and for the reasons recorded in the aforesaid judgment, the question is answered in favour of the Revenue and against the assessee.

M.B.A./83/FCReference answered.