Commissioner of Income Tax vs Chaman Lal Chandok

The Income Tax Appellate Tribunal, Chandigarh Bench, has referred the following questions of law, which arose out of its order dated August 18, 1992, for the assessment years 1988-89 and 1990-91 for the opinion of this court :

Question in R. A. No. 268/Chandi of 1992 :

"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in allowing deduction at 40 per cent. of incentive bonus, when the assessee had not actually incurred expenses to the extent of 40 per cent. wholly, necessarily, exclusively as provided u/s 10(14) of the Income Tax Act, 1961

Question in R. A. No. 269/Chandi. of 1992 :

"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in allowing deduction of additional conveyance allowance u/s 10(14) when the assessee had not actually incurred the amount wholly necessarily, exclusively for his development duties ?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in allowing deduction at 40 per cent. of incentive bonus, when the assessee had not actually incurred expenses to the extent of 40 per cent. wholly, necessarily, exclusively as provided u/s 10(14) of the Income Tax Act, 1961

We will first deal with the only question in R. A. No. 268 for the assessment year 1988-89 and question No. 2 in R. A. No. 269 for the assessment year 1990-91, which is common and pertains to incentive bonus. The said question is concluded by the judgment of this court in Income Tax References Nos. 105 and 106 of 1986, decided on October 27, 1998, in the case of B.M. Parmar Vs. Commissioner of Income Tax, wherein the question has been answered in favour of the Revenue and against the assessee. In that view of the matter, this question is answered in the negative, i.e., in favour of the Revenue and against the assessee.

So far as question No. 1 in R. A. No. 269/Chandi. of 1992 is concerned, the Tribunal has not given any independent finding on this question, but has decided the same by adopting the same reasoning which related to question No. 2, referred to above. We find that the Income Tax Officer had granted the additional conveyance allowance u/s 10(14) of the Income Tax Act to the tune of Rs. 30,000 as against Rs. 47,843 claimed by the assessee. A sum of Rs. 30,000 was allowed on the basis of the Life Insurance Corporation''s Circular No, MKTG/7B/10(8), dated March 31, 1987. The same was the view taken by the Commissioner of Income Tax (Appeals).

On a consideration of the matter, we are of the view that the Income Tax Officer as also the Commissioner of Income Tax (Appeals) correctly interpreted section 10(14) of the Act and had allowed Rs. 30,000 on account of additional conveyance allowance. Thus this question is also answered in the negative, i.e., in favour of the Revenue and against the assessee.

References are answered accordingly. No costs.