R.P. Khunteta vs Commissioner of Income Tax

On an application filed u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act''), the Tribunal has referred the following questions for our opinion :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the incentive bonus received by the assessee from Life Insurance Corpn. of India constitutes income from salary ?

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that no expenditure is allowable to the assessee against earning of incentive bonus, except standard deduction u/s 16(1) of the Income Tax Act ?"

The assessee is a salaried employee of the Life Insurance Corpn. of India. In addition to his salary and other allowances, the assessee received incentive bonus of Rs. 1,00,599, Rs. 96,968, Rs. 1,34,581 and Rs. 1,07,600 for the assessment years 1985-86, 1986-87, 1987-88 and 1988-89, respectively, from the Life Insurance Corpn. for performance of his duties. The assessee claimed that he should be allowed deduction of 40 per cent from this incentive bonus on the basis that he has incurred some expenses for earning this bonus. The claim of the assessee was negatived by the assessing officer. The Commissioner (Appeals) allowed the claim of the assessee.

In appeal before the Tribunal, the Tribunal relied on its decision in the case of (1991) 39 ITD 154 and on the decision of the Andhra Pradesh High Court in the case of K.A. Choudary v. CIT (1990) 183 ITR 291 and decided the issue against the assessee.

None appeared for the assessee. Heard the learned counsel for the revenue, Mr. Singhi. Mr. Singhi brought to our notice that similar issue has been considered by this court in the case of H.M. Pareek v. CIT (D.B. IT Reference No. 18 of 1995, dated 5-7-2002), wherein this court has held that salaried employee of the Life Insurance Corporation is not entitled to any deduction on incentive bonus.

Following the view taken in the case of H.M. Pareek (supra), we find no infirmity in the order of the Tribunal.

in the result, we answer both the questions in the affirmative, i.e., in favour of the revenue and against the assessee.

Reference so made stands disposed of accordingly.