COMMISSIONER OF INCOME-TAX VS ANIL K. HAZARIKA
2001 P T D 2633
[248ITR8]
[Supreme Court of India]
Present: S. P. Bharucha, D. P. Mohapatra and S. N. Phukan, JJ
COMMISSIONER OF INCOME‑TAX
versus
ANIL K. HAZARIKA
Civil Appeal No.5861 of 1997, decided on 16/11/2000.
(Appeal by special leave from the judgment and order, dated June 25, 1996 of the Gauhati High Court in Civil Rule No.4 (M) of 1996).
Income‑tax‑‑‑
‑‑‑‑Reference‑‑‑Question of law‑‑‑Incentive bonus‑‑‑Assessable under the head "Salaries "‑‑‑Whether 40 per cent. allowable as deduction‑‑‑Is a question of law‑‑‑Indian Income Tax Act, 1961, Ss.16 & 256(2)‑‑‑[CIT v. Ram Krishna Bank (1995) 215 ITR 901 (Gauhati) overruled].
Held, that the question (i) whether the Tribunal had erred in law in allowing 40 per cent. deduction from the incentive bonus granted to the assessee (a development officer) by the employer (the LTC) when the incentive bonus was assessable under the head "Salaries" and (ii) whether such further deduction of 40 per cent. was allowable under section 16 of the Income Tax Act, 1961, were questions of law.
The Supreme Court, accordingly, set aside the order of the High Court and directed the Appellate Tribunal to state a case and refer the questions of law to the High Court.
CIT v. Ram Krishna Bank (1995) 215 ITR 901 (Gauhati) overruled.
BARUAH, J.‑‑‑This is an application under section 256(2) of the Income Tax Act, 1961 (for short, "the Act").
The respondent‑assessee is a Development Officer of the Life Insurance Corporation of India Ltd‑. He filed his return of income on March 10, 1987, for the assessment year 1986‑87` showing total income of Rs. 85,810. Notices were issued to the assessee under section 143(2) of the Act. In compliance to the show‑cause notice, the assessee appeared before the Assessing Officer through his authorised representative. The Assessing Officer computed the total income vide assessment order, dated March 30, 1988, under section 143(3) of the Act. However, the claim of the‑ assessee was rejected for deduction of 40 per cent. of the incentive bonus.
Being aggrieved, the assessee referred an appeal before the Commissioner of Income‑tax (Appeals), Dibrugarh. The Commissioner of Income‑tax (Appeals) directed the Assessing Officer to reduce the total income of the assessee by deducting 40 per cent, of the incentive bonus.
Being aggrieved, the Revenue preferred an appeal before the Income‑tax Appellate Tribunal. However, the Tribunal upheld the order passed by the Commissioner of Income‑tax (Appeals).
Thereafter, tile Department filed an application under section 256(1) of the Act before the Tribunal to refer the following two questions before this Court for opinion:
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal has not erred in law in allowing 40 per cent. deduction from the incentive bonus granted by the employer when the incentive bonus is assessable under the head 'Salaries'?
(2) Whether on the, proper construction of section 16 of the Income‑tax Act, further deduction at 40 per cent. from the incentive bonus is allowable in addition to specific deduction allowable under that section?"
However, the Tribunal refused to refer to the same. Hence, the present petition.
Heard Mr. G.K. Joshi, learned standing counsel appearing on behalf of the Revenue, and Dr. A.K. Saraf, learned counsel appearing on behalf of the assessee.
Dr. Saraf submits that the case is squarely covered by a decision of this Court rendered in the case of CIT v. Ram Krishna Bank (1995) 215 ITR 901. Mr. Joshi does not dispute the same.
We have gone through the aforesaid decision. In our opinion the case is squarely covered by the said decision of CIT v. Ram Krishna Bank (1995) 215 ITR 901 (Gauhati).
Accordingly, following the aforesaid decision, we hold that the questions referred to above are questions of fact and, therefore, we are not inclined to give any direction to the Tribunal.
In view of the above, the petition is dismissed.
However, in the facts and circumstances of the case we make no order as to costs.
The Department preferred an appeal to the Supreme Court.
K.N. Shukla, Senior Advocate (S.W.A. Quadri and Ms. Sushma Suri, Advocates with him) for Appellant.
Respondent: Ex parte.
ORDER
The respondent assessee has been served but has not chosen to put in an appearance.
The High Court, by the order under challenge, declined to call for a reference of the questions set out below on the ground that they were questions of fact and covered by the decision of that Court in the case of CIT v. Ram Krishna Bank (1995) 215 ITR 901.
The questions read thus:
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal has not erred in law in allowing 40 per cent. deduction from the incentive bonus granted by the employer when the incentive bonus is assessable under the head Salaries'?
(2) Whether on the proper construction of section, 16 of the Income‑tax Act, further deduction at 40 per cent. from the incentive bonus is allowable in addition to specific deduction allowable under that section ?"
The decision in the case of CIT v. Ram Krishna Bank (1995) 215 ITR 901 (Gauhati) also holds that identical questions are questions of fact.
We are of the view that the questions are questions of law and that the High Court should have directed the Tribunal to refer the same to it for its consideration.
Accordingly, the appeal is allowed. The order under challenge is set aside and the Tribunal is directed to refer the questions quoted above to the High Court for its consideration, after drawing up a statement of case.
No order as to costs.
M.B.A./936/FC Appeal allowed.