Shri Nitinbhai T. Bhuptani, L.I.C, RAJKOT-GUJARAT V. The Dy. Commr. of Income Tax, Cir.-4, RAJKOT-GUJARAT

ITA 13/RJT/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7758 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 06-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAMITA KHURANA
• Assessee Lawyers: RD LALCHANDANI
• Keywords: Value adopted by valuation officer; Capital asset; Business income; Depreciation; Business expenditure; Salary income; Fair market value
• Section: 142(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI PRAMOD KUMAR, ACCOUNTATN MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 13/RJT/2016 & 14/RJT/2016 & 182/RJT/2017 / ASSTT. YEAR: 2010-2011, 2011-12 & 2012-13 NITINBHAI T. BHUPTANI, LIC OF INDIA, BRANCH-1, PATTANI BUILDING, RAJKOT. PAN: ACBPB3527E VS. (1) THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4, RAJKOT (2) THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-4, RAJKOT (3) THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-2(3), RAJKOT / (APPELLANT) / (RESPONDENT) ASSESSEE BY : R.D. LALCHANDANI, A.R REVENUE BY : SMT. NAMITA KHURANA, SR. D.R / DATE OF HEARING : 30/01/2018 / DATE OF PRONOUNCEMENT: 18/04/2018 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT THREE APPEALS ARE DIRECTED AT THE INSTA NCE OF ASSESSEE AGAINST THE ORDER OF LD. CIT(A) DATED 21.10.2015, 2 0.10.2015 & 22.03.2017 PASSED FOR A.Y. 2010-11, 2011-12 & 2012- 13 RESPECTIVELY. ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 2 2. SINCE COMMON ISSUED ARE INVOLVED, THEREFORE, WE HEARD THESE APPEALS TOGETHER AND DEEMED IT APPROPRIATE TO DISPO SED OF THEM BY THIS COMMON ORDER. 3. GROUND NO. 1 IN A.Y. 2010-11 IS COMMON WITH GROU ND NO. 1 IN A.Y. 2012-13. IN THESE GROUNDS OF APPEAL GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN UPHOLDING THE REOPENIN G OF ASSESSMENT. 4. LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THESE GROUNDS HENCE THEY ARE REJECTED. 5. GROUND NO. 2 SUB GROUND-A IN A.Y. 2010-11 IS COM MON WITH SUB GROUND A OF GROUND NO. 1 IN A.Y. 2011-12. 6. THE GRIEVANCE OF THE ASSESSEE IN THESE GROUNDS A RE THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF 20% OF THE CONVENIENCE EXPENSES. THE LD. COUNSEL FOR THE ASSES SEE DID NOT PRESS THESE GROUNDS OF APPEAL HENCE THEY ARE REJECTED. 7. IN THE NEXT FOLD OF GRIEVANCE, ASSESSEE PLEADED THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1,5 6,000/-, 2,07,381/- AND 45,330/- OUT OF ALLOWANCE PROCURING THE BUSINES S IN A.Y. 2010-11, 2011-12 & 2012-13 RESPECTIVELY. BEFORE ADVERTING TO THE SPECIFIC GRIEVANCES LET US TAKE NOTE OF THE BRIEF FACTS OF C ASE. THE FACTS ON VITAL POINTS ARE COMMON, THEREFORE, FOR THE FACILITY OF R EFERENCE, WE TAKE FACTS FROM A.Y. 2010-11. THE ASSESSEE AT THE RELEVANT TI ME WAS WORKING AS A DEVELOPMENT OFFICER WITH THE LIC OF INDIA. HE HAS F ILED HIS RETURN OF INCOME FOR A.Y. 2010-11 ON 24.03.2011 DECLARING TOT AL INCOME OF RS. 14,35,240/-. THIS RETURN WAS PROCESSED U/S. 143(1) THEREAFTER LD. ASSESSING OFFICER HAS RECORDED REASONS AND REOPENED THE ASSESSMENT. ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 3 THE ASSESSING OFFICER HAD ISSUED NOTICE U/S. 143(2) ALONG WITH NOTICES U/S. 142(1) WITH DETAIL QUESTIONNAIRE. THE BASIC AR EA OF DISPUTE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER IN A.Y. 2010 -11 PERTAINS TO CLAIM OF FOLLOWING ALLOWANCES:- HEAD UNDER WHICH DEDUCTION IS CLAIMED AMOUNT (RS.) FIXED CONVEYANCE ALLOWANCE 42,000/- ALLOWANCE FOR PROCURING BUSINESS 1,56,000/- ADDL. CONVEYANCE ALLOWANCE 1,56,000/- TOTAL 3,54,000/- 8. WITH REGARD TO FIXED CONVENIENCE ALLOWANCE AND A DDITIONAL CONVENIENCE ALLOWANCE. LD. ASSESSING OFFICER HAS OB SERVED THAT ASSESSEE IS A SALARIED EMPLOYEE, ALLOWABILITY OF CL AIM OF DEDUCTION IS REQUIRED TO BE DETERMINED ON THE BASIS OF SECTION 1 0(14) OF THE INCOME TAX ACT. THIS SECTION CONTEMPLATES THAT CERTAIN ALL OWANCES WOULD BE EXEMPTED WHICH ARE SPECIFICALLY GRANTED TO MEET EXP ENSES WHICH ARE WHOLLY, NECESSARY AND EXCLUSIVE INCURRED IN THE PER FORMANCE OF DUTY OF AN OFFICER TO THE EXTENT TO WHICH SUCH EXPENSES ARE ACTUALLY INCURRED FOR THE PURPOSE. THE LD. ASSESSING OFFICER FURTHER OBSE RVED THAT CERTAIN SPECIFIC ALLOWANCES FOR THE PURPOSE OF CLAUSE 14 OF SECTION 10 ARE BEING PRESCRIBED UNDER RULE 2BB OF THE INCOME TAX RULES 1 962. IN ORDER TO CLAIM THESE ALLOWANCES, AN ASSESSEE HAS TO FULFILL THREE CONDITIONS NAMELY, (A) THE ALLOWANCE SHOULD BE PRESCRIBED UNDE R RULE 2BB OF THE INCOME TAX RULES, (B) EXPENSES SHOULD BE INCURRED W HOLLY, NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF DUTIES (C) AL LOWANCES SHOULD BE EXEMPT TO THE EXTENT TO WHICH SUCH EXPENSES ARE ACT UALLY INCURRED FOR THAT PURPOSE I.E. EXPENSES INCURRED SHOULD BE SUPPO RTED BY TEMPORARY EVIDENCE. THE LD. ASSESSING OFFICER THEREAFTER MADE AN DETAILED ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 4 EXAMINATION AND OBSERVED THAT IN A.Y. 2010-11 ASSES SEE HAS CLAIMED FIX CONVENIENCE ALLOWANCE OF RS. 42,000/- AND ADDIT IONAL CONVENIENCE ALLOWANCE AT RS. 1,56,000/-. HE FAIL TO SUBMIT COMP LETE BILL AND VOUCHERS INCLUDING LOG BOOK. THEREFORE LD. ASSESSIN G OFFICER DISALLOWED 20% OF RS. 1,98,000/- AND HE ALLOWED RS. 1,58,400/- AS DEDUCTION. THE ASSESSEE HAS CHALLENGED THIS 20% DISALLOWANCE BEFOR E THE LD. CIT(A) AS WELL AS BEFORE US IN SUB GROUND A OF GROUND NO. 1 I N ALL THESE YEARS BUT LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GRO UND. HENCE THE DISALLOWANCE MADE BY THE A.O IN THIS RESPECT IS CON FIRMED. 9. THE SECOND FOLD OF GRIEVANCE IS DISALLOWANCE OF EXPENDITURE ALLEGED TO BE INCURRED FOR PROCURING BUSINESS. THE CASE OF THE ASSESSEE IS THAT LIC HAS FORMULATED SCHEME WHEREBY CERTAIN D EVELOPMENT OFFICERS WERE CONSIDERED AS ELIGIBLE TO AS A SENIOR BUSINESS ASSOCIATE THE SENIOR BUSINESS ASSOCIATE WERE REQUIRED TO MAINTAIN THE OF FICE AT THEIR PREMISES AND LIC WOULD REIMBURSED THE EXPENDITURE. THE SCHEME HAS BEEN REPRODUCED BY THE ASSESSEE IN THE STATEMENTS O F FACTS FILED BEFORE US. IT HAS BEEN TAKEN NOTE BY THE LD. CIT(A) WHILE TAKING COGNIZANCE OF THE ASSESEES WRITTEN SUBMISSION. THE SCHEME SUBMIT TED IN A.Y. 2010- 11 IN THE STATEMENTS OF FACTS READ AS UNDER:- SIMILARLY DURING THE ACCOUNTING PERIOD THERE WAS SE NIOR BUSINESS ASSOCIATES SCHEMES AS UNDER. ELIGIBILITY CRITERIA: A DEVELOPMENT OFFICER WILL BE CONSIDERED ELIGIBLE T O APPLY AS SENIOR BUSINESS ASSOCIATE IF HE/SHE (I) HAS COMPLETED 5 YEARS SERVICE. (II) HAS WORKED AT A COST RATIO OF 3% OR LESS IN TH E LAST COMPLETED APPRAISAL YEAR. THE COST RATIO SHOULD BE RECKONED AND ROUNDED OFF T O THE NEAREST FIRST DECIMAL PLACE; FOR EXAMPLE, IF THE COST RATIO WORKS TO 3.04 %, IT SHOULD BE TAKEN AS 3% AND IF IT WORKS TO 3.05%, IT SHOULD BE TAKEN AS 3.1%. (III) IS HAVING HIS/HER OWN OFFICE AND ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 5 (IV) IS WILLING TO WORK AS A SENIOR BUSINESS ASSOCI ATE. FUNCTIONS: BESIDES PERFORMING HIS/HER BASIC DUTIES AND OBLIGAT IONS AS A DEVELOPMENT OFFICE, SUCH SELECTED SENIOR BUSINESS ASSOCIATES SHALL BE A UTHORIZED TO CARRY OUT MARKET ORIENTED/CUSTOMERS ORIENTED FUNCTIONS THROUGH ONLIN E PORTAL FROM HIS/HER OFFICE. INITIALLY, THE SENIOR BUSINESS ASSOCIATE SHALL BE A UTHORIZED TO: 1.COLLECT RENEWAL PREMIUMS FROM ALL POLICYHOLDERS. 2.COLLECT PROPOSAL DEPOSITS TRANSACTION FROM AGENTS UNDER HIS/HER ORGANIZATION. 3.REGISTER PROPOSAL OF AGENTS WORKING UNDER HIS/HER ORGANIZATION. 4.SUBMIT PROPOSAL OF AGENTS WORKING UNDER HIS/HER O RGANIZATION THROUGH ELECTRONIC MEDIA (E PROPOSAL). THE FOLLOWING ADD ON FUNCTIONS WILL BE ALLOWED TO A SENIOR BUSINESS ASSOCIATES. 1.ISSUE OF POLICY STATUS REPORTS. 2.ISSUE OF REVIVAL /LOAN/SURRENDER VALUE QUOTATIONS . 3.ISSUE OF FORMS. 4.ISSUE OF CERTIFICATES TO THE POLICYHOLDERS FOR IN COME TAX PURPOSE. 5.ULIP STATEMENTS. BENEFITS AND ALLOWANCE: FOR THE PURPOSE OF ALLOWING BENEFITS AND ALLOWANCES , SUCH SENIOR BUSINESS ASSOCIATES WOULD BE DIVIDED INTO 3 CATEGORIES AS SH OWN BELOW. CATEGORY PLACE OF POSTING I CITIES OF MUMBAI, KOLKATA, CHENNAI, DELHI & NOIDA, FARIDABAD, GHAZIABAD, GURGAON AND NAVI MUMBAI. II CITIES WITH POPULATION EXCEEDING 12 LAKHS, EXCEPT T HOSE MENTIONED IN (I) ABOVE, ANY CITY IN THE STATE OF GOA AND GANDHI NAGAR. III OTHER PLACES. THE POPULATION FIGURES FOR THE ABOVE PURPOSE SHALL BE AS PER THE LATEST CENSUS REPORT. FURTHER, THE CITIES SHALL ALSO INCLUDE THEI R URBAN AGGLOMERATION. THE ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 6 CLASSIFICATION OF CITIES FOR THE PURPOSE OF PAYMENT OF BENEFITS SHALL BE AS SHOWN BELOW. CATEGORY-I CATEGORY-II CATEGORY-III KOLKATA- INCLUDING MUNICIPAL AREAS COMPRISING CITY OF KOLKATA (INCLUDING BEHALA, ALIPUR, COSSIPUR, TOLLYGUNGE), HOWRAH, BARRACKPORE (INCLUDING NORTH BARRACKPORE), GARDEN REACH BARRANAGORE SOUTH SUBURBAN MUNCIPAL AREA DUM DUM (INCLUDING SOUTH DUM DUM), KAMARHATTI, PANIHATI, KNARDA, TITAHGARH, GARULIA, BHATPARA, NAIHATI, BALLY, UTTARPARA, KONNAGAR, RISHRA, CORAMPERE, BALDYABALL, CHAMPDAM, BHADRESHWAR, CHADANNAGAR, HOOGLY, CHINSURA, BUDGE BUDGE, HABRA, BARUIPUR, BARASAT AND ULUBERIA. AGRA, AHMEDABAD, BANGALORE, BHOPAL. COIMBATORE (INCLUDING SULUR), GANDHINAGAR, GOA (ENTIRE STATE),HYDERABAD, INDORE, JAIPUR, KANPUR, KOICHI, LUCKNOW, LUDHIANA, MADURAI ( INCLUDING TIRUNAGAR), NAGPUR, PATNA, PUNE (INCLUDING PIMPRI & CHINCHWAD). SURAT, VADODARA, VARANASI, VISHAKHAPATNAM (INCLUDING GAJUWAKA). ALL OTHER PLACES. CHENNAI MUMBAI -INCLUDING AREAS COMPARISING WITHIN THE LIMITS OF MUMBAI MUNCIPAL CORPORATION (GREATER MUMBAI), DOMBIVLLI, KALYAN, THANE, BHAWANDI, UTHASNAGAR BASSEIN MUNCIPALITIES AND NAVI MUMBAI NEW DELHI-FARIDABAD, GHAZIABAD, GURGAON, NOIDA. THE FOLLOWING BENEFITS WILL BE PROVIDED TO SUCH SEN IOR BUSINESS ASSOCIATES FOR MARKETING AND CUSTOMERS RELATED SERVICES: ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 7 1. ONE TIME INTEREST FREE ADVANCE FOR MAKING ALTERNATI ONS IN THE OFFICE INFRASTRUCTURE, RENOVATION, PURCHASE OF FURNITURE E TC. AS SHOWN BELOW: PARTICULARS CATEGORY-I CATEGORY-II CATEGORY-III MAXIMUM AMOUNT OF ADVANCE (RS.) 1,50,000 1,25,000 1,00,000 REPAYMENT TERM 4 YEARS ( 48 INSTALLMENTS) 4 YEARS ( 48 INSTALLMENTS) 4 YEARS ( 48 INSTALLMENTS) INSTALLMENT PER MONTH (RS.) 3125 1 ST - 2565 2 ND - TO 48 TH - 2605 L ST -2240 2 ND -TO 48 TH -2080 2. THEY WILL BE REIMBURSED AN AMOUNT AS SHOWN BELOW, P ER MONTH TOWARDS OFFICE MAINTENANCE SUBJECT TO CERTAIN MINIMUM NUMBER OF RE NEWAL PREMIUM TRANSACTIONS, PROPOSAL DEPOSITS TRANSACTION, REGIST RATION OF PROPOSAL AND SUBMISSION OF E PROPOSALS. PARTICULARS CATEGORY-I CATEGORY-II CATEGORY-ILL MAXIMUM AMOUNT OF REIMBURSEMENT ALLOWED PER MONTH (RS.) 25,000 20,000 15,000 THE AMOUNT AS SHOWN ABOVE WILL BE REIMBURSED SUBJECT TO CERTAIN MINIMUM TRANSACTION IN A MONTH, WHICH WOULD BE AS SHOWN BEL OW: PARTICULARS 1 ST QUARTER (APRIL TO JUNE) 2 ND QUARTER (JULY TO SEPTEMBER) 3 RD QUARTER (OCTOBER TO DECEMBER) 4 TH QUARTER ( JANUARY TO MARCH) RENEWAL PREMIUM 200 P.M. 250 P.M. 350P.M. 400 P.M. PROPOSAL DEPOSITS 40 P.M. 60 P.M. 70 P.M. 70 P.M. SUBMISSION/ REGISTRATION OF E PROPOSAL 30 P.M. 60 P.M. 60 P.M. 60 P.M. ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 8 THE SENIOR BUSINESS ASSOCIATE WHO FULFILLS THE ABOVE BE NCHMARK SHALL BE ALLOWED REIMBURSEMENT TOWARDS OFFICE MAINTENANCE ALONG WITH REIMBURSEMENT TOWARDS VARIOUS TRANSACTIONS FOR THAT MONTH. IN CASE HE DOE S NOT FULFILL THE BENCHMARK. HE SHALL BE ONLY ALLOWED REIMBURSEMENT TOWARDS VARIOUS TRANSACTIONS. HOWEVER AT THE END OF THE QUARTER THE SR. DIVISIONAL MANGER IN-CHA RGE SHALL REVIEW THE TOTAL TRANSACTIONS MADE AND IN CASE THE SENIOR BUSINESS A SSOCIATES HAS FULFILLED THE QUARTERLY TARGET BASED ON THE MONTHLY TARGET OF THE CONCERNED MONTHS. HE/SHE SHALL BE PAID THE REIMBURSEMENT TOWARDS OFFICE MAINTENANC E INCLUDING THE MONTH/S FOR WHICH HE COULD NOT ACHIEVE THE BENCHMARK. IT MAY BE NOTED THAT THE DEFICIT FOR A PARTICULAR QUARTER SHALL NOT BE CARRIED FORWARD TO THE NEXT QUARTER. ADDITIONAL REIMBURSEMENT: THE ADDITIONAL REIMBURSEMENT ALLOWED TO SUCH SENIOR BUSINESS ASSOCIATES FOR COLLECTION OF RENEWAL PREMIUM/PROPOSAL DEPOSITS, SU BMISSION AND REGISTRATION OF E PROPOSAL SHALL BE AS SHOWN BELOW: I) A TRANSACTION FEE OF RS. 5/- PER POLICY FOR COLLECTION OF RENEWAL PREMIUM PROPOSAL DEPOSITS. THE TRANSACTION FEE IN CASE OF PROPOSAL DEPOSITS WI LL BE PAID WHEN THE BOC IS ADJUSTED TO NB PREMIUM. II) A TRANSACTION FEE OF RS. 107- PER POLICY FOR CO LLECTION OF PROPOSAL DEPOSITS, SUBMISSION AND REGISTRATION OF E-PROPOSAL. NO ADDITIONAL REIMBURSEMENT WILL ALLOWED TO A SENIO R BUSINESS ASSOCIATE FOR PERFORMING THE ADD-ON FUNCTIONS. IN THE EVENT OF A DEVELOPMENT OFFICER JOINING AS A SENIOR BUSINESS ASSOCIATE IN THE MIDDLE OF THE MONTH, THE REIMBURSEMENT TOWARDS OFFI CE MAINTENANCE SHALL BE ALLOWED FROM THE FIRST OF THE FOLLOWING MONTH. HOWE VER, HE/SHE SHALL BE ALLOWED REIMBURSEMENT TOWARDS VARIOUS TRANSACTIONS. THE SENIOR BUSINESS ASSOCIATE HAS TO CONTINUE TO MA INTAIN THE COST RATIO AT 3% IN THE SUBSEQUENT APPRAISAL YEARS. HOWEVER, ZONAL MANG ER IN-CHARGE CAN WAIVE THE COST RATIO UP TO 1% IN THAT APPRAISAL YEAR IN WHICH THE COST RATIO HAS EXCEEDED BY 3%. SUCH CONCESSION WILL BE ALLOWED ON 2 OCCASION A FTER WHICH NO REIMBURSEMENT SHALL BE ALLOWED TOWARDS OFFICE MAINTENANCE. HOWEVE R THE SENIOR BUSINESS ASSOCIATE WILL BE ALLOWED ADDITIONAL REIMBURSEMENT FOR RENEWAL PREMIUM/PROPOSAL DEPOSIT TRANSACTION/SUBMISSION AND REGISTRATION OF E PROPOSAL. THE REIMBURSEMENT ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 9 TOWARDS OFFICE MAINTENANCE SHALL CONTINUE ONCE THE SENIOR BUSINESS ASSOCIATE MAINTAINS THE COST RATIO AT 3% OR BELOW. THUS, THESE RECEIPTS WERE REIMBURSEMENT OF EXPENSES INCURRED FOR ON BEHALF OF L1C FOR FUNCTION WHICH WERE NORMALLY PERFORMED BY LIC. 10. ON THE STRENGTH OF ABOVE SCHEME IT WAS CONTENDE D THAT AN ASSESSEE HAS RECEIVED INCENTIVE BONUS OF RS. 15,55, 000/- AND 10% OF SUCH BONUS OUGHT TO BE CONSIDERED AS REIMBURSEMENT OF THE EXPENDITURE INCURRED BY THE ASSESSEE FOR PROCURING THE BUSINESS IN THE CAPACITY OF A SENIOR BUSINESS ASSOCIATE. THE ASSESS ING OFFICER OBSERVED THAT THE ADDITIONAL INCENTIVE BONUS RECEIVED BY THE ASSESSEE WOULD BE TREATED AS A SALARY INCOME AND ASSESSEE CANNOT CLAI M ANY DEDUCTION AGAINST SALARY INCOME. FURTHER ASSESSEE HAS TREATED AS SBA ALLOWANCE RS. 45,000/- AND DEVELOPMENT ALLOWANCE OF RS. 26,55 0/- AS A BUSINESS INCOME. LD. ASSESSING OFFICER DID NOT ACCEPT THIS S TAND OF THE ASSESSEE. HE TREATED THESE ALLOWANCES AS SALARY INCOME AND DI D NOT GRANT EXPENDITURE ON THE ALLEGED MAINTENANCE OFFICE ETC. HE MADE ADDITION OF RS. 1,56,000/-. 11. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HA VE GONE THROUGH THE RECORD VERY CAREFULLY. WE FIND THAT ON PAGE NO. 10 AND 11 OF THE PAPER BOOK, ASSESSEE HAS PLACED ON RECORD CERTIFICA TE FROM THE LIC WHICH CONTAINS BREAK UP SALARY RECEIVED BY HIM. THE INCENTIVE BONUS OF RS. 15,65,000/- IS BEING TREATED AS A PART OF SALAR Y BUT IT HAS BEEN PROVIDED THAT 10% OF INCENTIVE BONUS WOULD BE FURTH ER ALLOWED TO THE ASSESSEE TO MEET THE VARIOUS EXPENSES FOR PROCURING THE BUSINESS. THUS IN TOTAL ASSESSEE GOT 15,65,000/- + 1,56,000/-. THI S AMOUNT OF RS. 1,56,000/- ALLOWED TO THE D.O FOR PROCURING THE BU SINESS WAS MARKED AS EXPENDITURE, THIS IS 10% OF THE TOTAL INCENTIVE BONUS. IT IS ACCORDING TO THE SCHEME OF THE INSURANCE COMPANY WHICH DESIGN ATED CERTAIN ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 10 DEVELOPMENT OFFICER ON FULFILLMENT OF THE CONDITION OF THE SENIOR BUSINESS ASSOCIATE. IT IS TO BE CONSTRUED AS REIMBU RSEMENT OF THE EXPENDITURE QUANTIFIED BY THE EMPLOYER ITSELF. THER EFORE THIS AMOUNT IS TO BE ALLOWED TO THE ASSESSEE. WE ALLOW SPECIAL GRA NT B IN ASSESSMENT YEAR 2010-11 AND DELETE THE DISALLOWANCE OF RS. 1,5 6,000/-. 12. IN REST OF THE TWO YEARS ASSESSEE HAS NOT FILED COPY OF THE BREAK UP AS FILED IN A.Y. 2010-11 I.E COPY OF THE CERTIFI CATE AVAILABLE ON PAGE NO. 10 TO 11 OF A.Y. 2010-11 HAS NOT BEEN PLACED ON RECORD IN A.Y. 2011-12. AS OBSERVED EARLIER, PERUSAL OF PAGE 11 OF THE PAPER BOOK IN A.Y. 2010-11 WOULD INDICATE THAT ASSESSEE RECEIVED INCENTIVE BONUS OF RS. 15,65,000/-. HE HAS BEEN FURTHER GRANTED ALLOWA NCE OF RS. 1,56,000/-. IT IS 10% OF INCENTIVE BONUS WHICH HAS BEEN PAID IN ACCORDANCE WITH SCHEME. THIS BREAK UP HAS NOT BEEN FILED IN REST OF THE TWO YEARS. THEREFORE WE REMITTED THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER IN OTHER TWO YEARS WITH A DIRECTION THAT LD . ASSESSING OFFICER SHALL VERIFY THE AMOUNT OF ALLOWANCES GIVEN TO THE ASSESSEE IN THE CAPACITY OF SENIOR BUSINESS ASSOCIATE FOR EARNING I NCENTIVE BONUS. IN OTHER WORDS, THE ADDITIONAL ALLOWANCE FOR PROCURING BUSINESS HAS TO BE ALLOWED TO THE ASSESSEE CONSIDERING AS REIMBURSEMEN T OF ACTUAL EXPENDITURE. GROUND NO B & C IN A.Y. 2011-12 & 2012 -13 ARE SET ASIDE TO THE ASSESSING OFFICER FOR RE ADJUDICATION. 13. SUB GROUND NO. C OF GROUND 1 IN A.Y. 2010-11 TH E ASSESSEE HAS PLEADED THAT LD. CIT(A) HAS ERRED IN CONFIRMING DIS ALLOWANCE OF RS. 45,000/- OUT OF SBA ALLOWANCE AND DEVELOPMENT ALLOW ANCE OF RS. 26,550/-. THE ASSESSEE TREATED THESE AMOUNTS AS BUS INESS INCOME AND CLAIMED CORRESPONDING DEDUCTION IN THE SHAPE OF DEP RECIATION ETC. THE LD. REVENUE AUTHORITIES HAVE RIGHTLY TREATED THEM A S A SALARY INCOME BECAUSE ASSESSEE WAS A SALARIED EMPLOYEE CERTAIN EX PENSES COULD BE ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 11 ALLOWED TO HIM ON REIMBURSEMENT BASIS IF INCURRED O N BEHALF OF THE EMPLOYER FOR PROCURING THE BUSINESS BUT HE CANNOT B E TREATED AS DOING ANY BUSINESS. THEREFORE GROUNDS OF APPEAL ARE REJEC TED. 14. THE NEXT COMMON GROUND IN ALL THESE APPEALS IN ALL THE THREE YEARS RELATES TO DETERMINATION OF ANNUAL LETTING VA LUE OF THE HOUSE PROPERTY. THE ASSESSING OFFICER HAS DETERMINED ANNU AL LETTING VALUE OF THE HOUSE PROPERTY AT RS. 48,000 AND 60000 IN A.Y. 2010-11 TO 2012- 13 RESPECTIVELY. 15. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET CONT ENDED THAT THIS ISSUE WAS CONSIDERED BY THE ITAT IN A.Y. 2008-09 AN D TRIBUNAL HAS SET ASIDE TO THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO TAKE THE ALV OF THE PROPERTY EQUIVALENT TO THE VALE DETE RMINED BY MUNICIPAL CORPORATION FOR THE PURPOSE OF MUNICIPAL TAXES. THE ORDER OF THE TRIBUNAL IN ITA NO. 12/RJT/2016 HAS BEEN PLACED ON THE RECORD. THE LD. D.R WAS UNABLE TO CONTROVERT THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 16. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES WE FIND THAT IDENTICAL ISSUE FOR THE SAME PROPERTY WAS CONSIDERE D BY THE ITAT IN A.Y. 2008-09 AND TRIBUNAL HAS RECORDED FOLLOWING FINDING S:- 2. ASSESSEE HAS FILED RETURN OF INCOME ON 18.08,200 8 AND HAD CLAIMED EXEMPTION IN RESPECT OF ONE SELF OCCUPIED PROPERTY AND HAD SHOWN THE INCOME FROM OTHER PROPERTY AT RS. (-) 6454/- OTHER PROPERTY WAS SELF OCCUPIED PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER IN HIS ORDER OBSERVED AS UNDER: ON VERIFICATION OF THE STATEMENT OF INCOME THE ASSE SSEE CLAIMED DEDUCTION ON ACCOUNT OF INTEREST ON CAPITAL AMOUNTING TO RS.1,46 ,066/- U/S 24B, WHILE COMPUTING THE INCOME FROM HOUSE PROPERTY. FROM PERUSAL OF THE RECORD, IT IS SEEN THAT THE ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 12 AFORESAID INTEREST WAS PAID TO LIC HOUSING FINANCE LTD. AND CONSIDERED OF INTEREST AMOUNTING TO RS.1,39,612/- IN RESPECT OF PROPERTY S ITUATED AT YOGINIKETAN SOCIETY, KALAWAD ROAD, RAJKOT. APPARENTLY THIS PROPERTY IS B EING USED BY THE ASSESSEE AS HIS RESIDENT. 'NATURALLY NO INCOME FROM THIS PROPER TY HAS BEEN DECLARED IN THE RETURN. HOWEVER, A SMALL PORTION OF THE INTEREST AM OUNT TO RS. 6,454/- WAS CLAIMED IN THE RETURN IN RESPECT OF YET ANOTHER HOUSE PROPE RTY AT 3, JAGNATH POT, KALAWAD ROAD, RAJKOT. NO INCOME FROM THIS PROPERTY HAS BEEN DECLARED IN THE RETURN OF INCOME FILED. THEREFORE THE ASSESSEE'S CLAIM IS NOT ACCEPTABLE AS SUCH THE DEDUCTION CLAIMED AMOUNTING TO RS.6,454/- IS TREATED AS INCOM E FROM SALARY AND ADDED TO THE TOTAL INCOME.' ASSESSING OFFICER ESTIMATED ANNUAL L ETTING VALUE (HEREINAFTER DEPARTMENTAL VALUATION OFFICER. UNDER THE PROVISION S OF SECTION 55A, A REFERENCE TO VALUATION OFFICER CAN BE MADE FOR ASCERTAINING T HE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSE OF CHAPTER IV DEALING WITH DETERMINATION OF INCOME UNDER THE HEAD CAPITAL GAIN. IN CASE BEFORE US, ISS UE IS NOT OF CAPITAL GAIN OR FAIR MARKET VALUE. THE DETERMINATION OF ANNUAL VALUE HAS TO BE DONE' BY CONCERNED MUNICIPAL CORPORATION AS ENVISAGED IN CIRCULAR 204 DATED 24.07.1976. CBDT ACCEPTED THAT U/S.23(1)(A) SUM FOR WHICH THE PROPER TY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR IS THE MUNICIPAL VALUATION OF THE PROPERTY. SAME VIEW HAS BEEN TAKEN BY HON'BLE CALCUTTA HIGH COURT IN CASE O F CIT VS. PRABHABATI BANSALI I41 ITR 419 (CAL). IN VIEW OF THIS, OFFICER-IS DIRE CTED TO ADOPT THE MUNICIPAL VALUATION AS ALV FOR THE PURPOSE OF TAX IN QUESTION . 3. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. 17. SINCE THERE IS NO DISPARITY ON FACT, THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DETERMINE THE ALV OF THE HOUSE PROPERTY IN THESE YEARS IN ACCORDANCE WITH ITAT ORDER PASSED IN A.Y. 2008-09. 18. IN THE NEXT FOLD OF GRIEVANCE ASSESSEE HAS PLEA DED THAT LD. CIT(A) HAS ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO ALLOW INTEREST EXPENDITURE OF RS. 5,878/- AND RS. 2,784/- AGAINST HOUSE PROPERTY INCOME. SINCE THIS ISSUE HAS NOT BEEN SEPARATELY DI SCUSSED BY THE ASSESSING OFFICER IN A.Y. 2010-11, WE HAVE REMITTED THE ISSUE WITH REGARD TO DETERMINE OF ALV IN ALL THESE YEARS. THER EFORE WE SET ASIDE THIS ISSUE TO THE FILE OF LD. ASSESSING OFFICER. TH E LD. ASSESSING OFFICER SHALL VERIFY WHETHER ANY INTEREST EXPENDITURE IS AL LOWABLE TO THE ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 13 ASSESSEE AGAINST HOUSE PROPERTY INCOME THEN AFTER E XAMINATION HE WOULD DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 19. GROUND NO. 5 IN A.Y. 2012-13:- THIS ISSUE HAS B EEN DISCUSSED BY THE LD. CIT(A) AS UNDER:- THE AO HAD MADE ADDITION OF RS. 98985/- BEING BUSIN ESS EXPENSES DISALLOWED AS THERE WAS NO BUSINESS CARRIED ON BY A SSESSEE. THE ASSESSEE. DID NOT AGITATE THIS ADDITION. HOWEVER IT WAS SEEN THAT IN THE BODY OF ORDER THE DISALLOWANCE WAS STATED TO BE OF RS. 43620/- (MAINT ENANCE EXPENSES), RS. 43620/- (TRANSACTION FEES), STAFF SALARY, ELECTRICITY BILLS ETC. (RS. 167407/-) AND DEPRECIATION (RS. 11967/-). THE AO WAS ASKED TO REC ONCILE THE DISCREPANCY AND HAVING RECEIVED HIS REPORT THAT DISALLOWANCE NEEDS TO BE ENHANCED TO RS. 266596, THE SAME WAS CONFRONTED TO ASSESSEE. THE ASSESSEE H AS CONTESTED THIS DISALLOWANCE STATING THAT DISALLOWANCE STATING THAT DISALLOWANCE OF RS. 43602+RS. 43602/- HAS ALREADY BEEN MADE BY AO AND T HAT BALANCE EXPENSES WERE FOR ADDITIONAL WORK. HAVING CONSIDERED FACTS AND CI RCUMSTANCES OF THE CASE, I DO NOT FIND ANY MERIT IN CLAIM OF THE ASSESSEE. AS REG ARDS THE ADDITIONAL WORK THE ASSESSEE HAS ALREADY BEEN ALLOWED EXPENSES OF RS. 1 81226/- IN GROUND OF APPEAL 3. NO EXPENSES OTHER THAN ABOVE STATED REIMBURSEMEN TS ARE ALLOWABLE TO ASSESSEE AS HE IS EARNING INCOME FROM SALARY AND THESE ARE S TATELY BUSINESS EXPENSES AGAINST WHICH NO SUCH BUSINESS INCOME HAS BEEN SHOW N. ACCORDINGLY THE BUSINESS EXPENSE OF RS. 266596/- ARE DISALLOWED, WHICH RESUL TS INTO ENHANCEMENT OF RS. 266596/- RS. 98985/-= RS. 167611/-. 20. IT IS A CONSEQUENTIAL ISSUE, WHETHER ASSESSEE I S ENTITLE TO ANY EXPENDITURE UNDER THE HEAD BUSINESS EXPENSES, IT IS OBSERVED THAT WHILE DEALING WITH THE ISSUE IN A.Y. 2010-11 WE HAVE HELD THAT ASSESSEE WAS NOT DOING ANY BUSINESS. HE IS ENTITLED TO THE EXPEN SES WHICH WERE REIMBURSED BY THE LIC FOR PERFORMING THE DUTY AS A SENIOR BUSINESS ASSOCIATE. THE ASSESSEE SEPARATELY CANNOT CLAIM ANY EXPENDITURE UNDER THE HEAD BUSINESS EXPENDITURE. IN A.Y. 2011-12 & 20 12-13, THE ASSESSEE HAS NOT GIVEN US THE BREAKUP OF THE EXPEND ITURE ADDITIONALLY GIVEN BY LIC TO HIM FOR EARNING ADDITIONAL INCENTIV E OR PERFORMING DUTY AS A SENIOR BUSINESS ASSOCIATE. THE SCHEME CONSIDER ED BY US IN A.Y. ITA NO.13/RJT/2016, 14/RJT/2016 & 182/RJT/2017 A.Y. 2010-11, 2011-12 & 2012-13 14 2010-11 AND REPRODUCED ABOVE, AUTHORIZED 10 % OF AD DITIONAL CONVENIENCE ALLOWANCE OR AS ALLOWANCE OF THE INCENT IVE BONUS FOR PROCURING BUSINESS, THIS 10% IS TO BE DETERMINED ON THE BASIS OF CERTIFICATE OF LIC GIVING THE BREAKUP OF THESE EXPE NDITURE. THUS THIS ISSUE IS ALSO SET ASIDE TO THE FILE OF ASSESSING OF FICER. LD. ASSESSING OFFICER FIRST DETERMINED THE EXPENDITURE WHICH WERE TO BE CONSTRUED AS A REIMBURSED BY THE LIC FOR PROCURING BUSINESS IN T HE CAPACITY OF A SENIOR BUSINESS ASSOCIATE AND THEREAFTER WORK OUT T HE TOTAL AMOUNT ALLOWABLE TO THE ASSESSEE IN A.Y. 2011-12 & 2012-13 . THESE GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 21. IN THE RESULT APPEALS OF THE ASSESSEE ARE PARTL Y ALLOWED. ORDER PRONOUNCED IN THE COURT ON 18 TH APRIL, 2018. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 18/04/2018 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! '# $ / CONCERNED CIT 4. $ ( ) / THE CIT(A) 5. %&' (('# , '# / DR, ITAT, 6. ')* + / GUARD FILE. / BY ORDER, , / - . (DY./ASSTT.REGISTRAR) '# , -/! / ITAT, AHMEDABAD