Sh. Kanwarjeet Singh Monga, New Delhi V. ITO, New Delhi

ITA 4460/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2933 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 19-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA NO. 4460/DEL/2016 ASSESSMENT YEAR : 2008-09 KANWARJEET SINGH MONGA, 199, DHARAMKUNJ APARTMENTS, PLOT NO.40, SECTOR-9, ROHINI, NEW DELHI. PAN: AAQPM7125E VS. ITO, WARD 68(3), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VINAY BAHL, ADVOCATE DEPTT. BY : SHRI AMRIT LAL, SR.DR DATE OF HEARING : 06.06.2017 DATE OF PRONOUNCEMENT: 07.06.2017 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 06.06.2016 IN RELATION TO THE ASSESSMENT YEAR 2008-09. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAIN ST THE CONFIRMATION OF DISALLOWANCE OF RS.2,61,854/- OUT OF INCENTIVE BONU S. ITA NO.4460/DEL/2016 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A DEVELOPMENT OFFICER WITH LIC OF INDIA. A SUM OF RS .7,93,498/- WAS GIVEN AS INCENTIVE BONUS TO THE ASSESSEE AGAINST WHICH DE DUCTION OF RS.2,61,854/- WAS CLAIMED BY RELYING ON THE JUDGMENT OF THE HON'B LE GUJARAT HIGH COURT IN THE CASE OF CHIMANBHAI H. PATEL (1998) 99 TAXMAN 63 (GUJ). THE ASSESSING OFFICER REFUSED TO ALLOW SUCH DEDUCTION A ND DISALLOWED A SUM OF RS.2,61,854/-. THE LD. CIT(A), RELYING ON JUDGMENT OF THE HON'BLE SUPREME COURT IN T.K. GINARAJAN VS. CIT (2013) 9 SCC 270 , UPHELD THE DISALLOWANCE. THE ASSESSEE IS AGGRIEVED AGAINST THE SUSTENANCE OF DISALLOWANCE. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. THE ONLY ISSUE IS ABOUT THE ADMISSIBILI TY OR OTHERWISE OF DEDUCTION FOR EXPENSES AMOUNTING TO RS.2,61,854/- A GAINST THE INCENTIVE BONUS RECEIVED BY THE ASSESSEE. IT IS SEEN THAT TH E LD. CIT(A) HAS RELIED ON THE CASE OF T.K. GINARAJAN (SUPRA) FOR DENYING THE DEDUCTION. IT IS TRUE THAT THE HON'BLE SUPREME COURT DID NOT ALLOW DEDUCTION B Y HOLDING THAT THE INCENTIVE BONUS RECEIVED BY A GOVERNMENT OFFICER OF LIC OF INDIA IS CHARGEABLE TO TAX AS SALARY AND NO DEDUCTION OTHER THAN THAT PERMISSIBLE U/S ITA NO.4460/DEL/2016 3 16 CAN BE ALLOWED. HOWEVER, IT IS RELEVANT TO NOTE THAT THE HON'BLE SUPREME COURT IN THE SAME JUDGMENT HAS NOTICED VIDE PARA 3 AS UNDER : - `HOWEVER, WITH EFFECT FROM 01.04.1989, THE LIC ITSE LF ISSUED A CLARIFICATION TO THE EFFECT THAT THE DEVELOPMENT OFFICERS WOULD B E ENTITLED TO CLAIM REIMBURSEMENT TO THE EXTENT OF 30% OF THE INCENTIVE BONUS GRANTED TO THEM. THUS, THE DISPUTE IS CONFINED ONLY TO THE PER IOD PRIOR TO 01.04.1989 AND, THEREAFTER, THE DEVELOPMENT OFFICERS ARE ENTIT LED TO THE REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THEM, TO THE EXTENT OF 30%. IN OTHER WORDS, AFTER 01.04.1989, ONLY THAT PART OF THE INCENTIVE B ONUS AFTER REIMBURSING THE EXPENSES TO THE EXTENT OF 30% WILL APPEAR IN TH E SALARY CERTIFICATE. WHAT IS THE FATE OF THE INCENTIVE BONUS TO THE DEVE LOPMENT OFFICERS IN LIC PRIOR TO 01.04.1989 FOR THE PURPOSE OF INCOME-TAX I S THE QUESTION TO BE CONSIDERED IN THIS CASE. 5. THUS, IT IS APPARENT THAT THE JUDGMENT IN THE CASE OF T.K. GINARAJAN (SUPRA) IS APPLICABLE TO THE PERIOD PRIOR TO 01.04.1989. IN THE SAME BREATH, THE RELIANCE OF THE LD. DR ON THE CASE OF CIT VS. GANESH CHAND SAXENA (2006) 280 ITR 372 (ALL) IS AGAIN MISCONCEIVED AS THAT CASE HAVING ASSESSMENT YEARS 1980-81 TO 1982-83 ALSO PERTAINS T O THE PERIOD PRIOR TO 01.04.1989 6. THE ASSESSING OFFICER IN THE INSTANT CASE HAS REFERRED TO THE CBDT LETTER NO.149/25/96/TPL DATED 13.03.1997 ADDRESSED TO THE CHAIRMAN OF LIC OF INDIA ADMITTING THAT `SUCH PORTION OF THE INCENT IVE BONUS WHICH IS ACTUALLY SPENT BY THE DEVELOPMENT OFFICER FOR DUTY OF OFFICE CAN STILL BE ITA NO.4460/DEL/2016 4 EXEMPTED FROM TAX IF THE LIC MAKES THE PAYMENT AGAINST WHICH EXPENSES INCURRED BY THE DEVELOPMENT OFFICER BY WAY OF REIMB URSEMENT OF EXPENSES. WHEN I TURN TO THE FACTS OF THE INSTANT CASE, IT IS FOUND THAT THERE IS A CERTIFICATE FROM BRANCH MANAGER, LIC OF INDIA, COPY PLACED AT PAGE 2 OF THE PAPER BOOK, CERTIFYING INCURRING OF RS.2,61,854/- B Y THE ASSESSEE FOR MEETING EXPENSES OF CONVEYANCE, BEING INCURRED WHOL LY, NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF DUTIES AS A DEVEL OPMENT OFFICER OF A CORPORATION. HOWEVER, THERE IS NO MENTION ABOUT TH E REIMBURSEMENT OF EXPENSES BY THE LIC OF INDIA. THERE IS NO DISCUSSIO N IN THE ORDER AS TO WHETHER THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF EXPENSES WAS ACTUALLY REIMBURSED BY THE LIC OR NOT. THIS IS A RELEVANT FA CTOR AS THE DEDUCTION IS PERMISSIBLE ONLY TO THE EXTENT OF EXPENSES ACTUALLY REIMBURSED. UNDER THESE CIRCUMSTANCES, I SET ASIDE THE IMPUGNED ORDER AND R EMIT THE MATTER TO THE AO FOR EXAMINING THE ASPECT OF REIMBURSEMENT OF EXP ENSES BY LIC OF INDIA AND THEN REDUCE THE CHARGEABLE INCOME ACCORDINGLY. ITA NO.4460/DEL/2016 5 7. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 0 7 TH JUNE, 2017. SD/- (R.S. SYAL) VICE PRESIDENT DATED: 07 TH JUNE, 2017. DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI