Shri Kamlesh C. Bhagdev, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-4(1), RAJKOT-GUJARAT

ITA 525/RJT/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1190 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Section: 10(14)

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.525/RJT/2013 / ASSESSMENT YEAR: 2008-09 SHRI KAMLESH C. BAGDEV, LIC OF INDIA, CBO-3, TAGORE MARG, RAJKOT. [PAN: ABQPB 6297D] VS. INCOME TAX OFFICER, WARD-4(1), RAJKOT. ( / APPELLANT) ( /RESPONDENT) /ASSESSEE BY : SHRI M.J. RANPURA, A.R /REVENUE BY : SHRI PRAVIN VERMA, D.R /DATE OF HEARING : 22-11-2018 / DATE OF PRONOUNCEMENT : 26-11-2018 / ORDER PER C.M. GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, RAJKOT ( CIT(A) FOR SHORT) DATED 21.10.2013 FOR THE ASSESSMENT YEAR (A.Y) 2008 -09. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLLO WS: 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER AR E WITHOUT PREJUDICE TO ONE ANOTHER. 2 ITA NO.525/RJT/2013 (A.Y: 2008-09) SHRI KAMLESH C. BHAGDEV 2.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS)-III, RAJKOT (HEREINAFTER REFERRED TO AS THE 'CIT(A)') ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING DISALLOWANCE OF FIXED CONVEYANCE ALLOWAN CE OF RS. 37,560/- CLAIMED AS AN EXPENSE. THE DISALLOWANCE MA Y KINDLY BE DELETED. 3.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING DISALLOWANCE OF ADDITIONAL CONVEYANCE ALLOWANCE OF RS. 1,77,169/- CLAIMED AS A EXPENSE FROM INCENTIVE BONUS. THE DISA LLOWANCE MAY KINDLY BE DELETED. 4.0 YOUR HONOR'S APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE T RIBUNAL. THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT BOTH THE ISSUES ARE COVERED BY THE ORDER OF ITAT, RAJKOT (CONDUCTED THR OUGH E COURT AT AHMADABAD) DATED 26.09.2018 FOR AY 2009-10 IN ITA N O.526/RJT/2013 IN THE CASE OF LATE SHRI GIRIRAJSINH M. JHALA VS. ITO PARA 7. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE AUTHORITIES BEL OW AND SUBMITTED THAT THE LD. CIT(A) WAS RIGHT IN CONFIRMING BOTH THE ADD ITIONS THEREFORE, THE APPEAL MAY KINDLY BE DISMISSED. HOWEVER, HE DID NOT CONTROVERT THE FACT THAT THE TRIBUNAL IN ORDER DATED 26.09.2018 (SUPRA) IN IDENTICAL FACTS AND CIRCUMSTANCES HAS GRANTED RELIED TO THE ASSESSEE LA TE SHRI GIRARAJSINH M. JHALA. 4. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, FIRST OF ALL, WE MAY POINT OUT THAT THE TRIBUNAL IN THE ORDER DATED 26.09.2018 (SUPRA) IN PARAS 6 TO 9 HAS GRANTED RELIEF TO THE ASSESSEE IN THE IDENTICAL 3 ITA NO.525/RJT/2013 (A.Y: 2008-09) SHRI KAMLESH C. BHAGDEV CIRCUMSTANCES ON THE SIMILAR GROUNDS ON THE CLAIM O F FIXED CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE CLAI MED AS EXPENSES FROM INCENTIVE BONUS. THE RELEVANT PARAS ARE BEING REPRODUCED BELOW: 6. IN THE LIGHT OF THE ABOVE, LET US EXAMINE CLA IM OF THE ASSESSEE. A NOTE APPENDED TO THAT SR.NO.6 STATES THAT THE SAID INCENTIVE BONUS INCLUDES AN AMOUNT OF RS.60,609/- WHICH HAS BEEN IN CURRED BY THE ASSESSEE AS CONVEYANCE EXPENSES. THEREFORE, TO THAT EXTENT CLAIM OF CONVEYANCE EXPENSES CANNOT BE DENIED, AS THE SAME I S IN THE NATURE OF REIMBURSEMENT. 7. COMING TO THE CLAIM OF RS.40,762/- TOWARDS FIXED CONVEYANCE ALLOWANCE IS CONCERNED, THE ASSESSEE HAS PRODUCED C ERTAIN VOUCHERS AND DETAILS BEFORE THE LOWER AUTHORITIES, WHICH THE Y DOUBTED. HOWEVER, THE REVENUE AUTHORITIES HAVE NOT DOUBTED INCURRENCE OF SUCH EXPENDITURE IN ENTIRETY, RATHER ESTIMATED THE EXPEN DITURE TO BE 30% OF SUCH CLAIM. WE FURTHER FIND THAT THE HONBLE PUNJAB HIGH COURT IN THE CASE OF CIT VS. BRANCH MANAGER, LIC REPORTED IN 298 ITR 358 (P&H) AND THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF LIC VS. UNION OF INDIA, 260 ITR 41 HAS HELD THAT THE DEVELOPMENT OFF ICER IN THE LIC WERE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 10(14) OF THE ACT IN RESPECT OF CONVEYANCE ALLOWANCE/ ADDITIONAL ALLOWANCE UPON SAT ISFACTION THAT SUCH ALLOWANCES HAVE ACTUALLY BEEN SPENT FOR THE PURPOSE FOR WHICH THEY HAVE GIVEN WHOLLY, NECESSARILY AND EXCLUSIVELY FOR THE PURPOSE OF DUTIES. WE ARE NOT CONVINCED WITH THE LOGIC APPLIED BY THE AO IN ESTIMATING THE FIXED CONVEYANCE EXPENSES TO BE AT 30%, MORE SO WHE N IT CAN BE JUDGED THE ITA NO.526/RJT/2013 - 9 - FACT THAT THE ASSESSEE IS A DEVELOPMENT OFFICER OF LIC AND HE IS ENGAGED IN FIE LD WORK TO CANVAS CUSTOMERS FOR THE BUSINESS OF THE LIC. HE REQUIRED TO TRAVEL EXTENSIVELY FOR OBTAINING BUSINESS FOR THE LIC, AND THEREFORE F OR EARNING INCENTIVE BONUS OF RS.6,06,097/-INCURRENCE OF CONVEYANCE EXPE NSES TO THE EXTENT OF RS.40,762/- CANNOT BE DOUBTED AND HENCE DESERVES TO BE ALLOWED. THEREFORE, WE ALLOW ENTIRE FIXED ALLOWANCE OF RS.40 ,762/- CLAIMED BY THE ASSESSEE. 8. COMING TO BALANCE CLAIM OF RS.1,63,646/- OUT OF INCENTIVE BONUS OF RS.6,06,097/- IS CONCERNED, THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THIS AMOUNT REPRESENTED EXPENDITURE INCURRED B Y THE ASSESSEE IN PERFORMANCE OF HIS DUTIES AS A DEVELOPMENT OFFICER. AS A DEVELOPMENT OFFICER OF LIC, MAIN TASK IS TO DEVELOP BUSINESS FO R THE LIC. FOR THAT, THE ASSESSEE HAS TO UNDERTAKE VARIOUS FUNCTIONS LIKE, ( I) COLLECT RENEWAL PREMIUMS FROM ALL POLICYHOLDERS, (II) COLLECT PROPO SAL DEPOSITS TRANSACTION FROM AGENTS UNDER HIS/HER ORGANIZATION, (III) REGISTER PROPOSAL OF AGENTS WORKING UNDER HIS/HER ORGANIZATI ON, AND (IV) SUBMIT PROPOSAL OF AGENTS WORKING UNDER HIS/HER ORGANIZATI ON THROUGH ELECTRONIC MEDIA (E PROPOSAL), WHICH IS APART FROM WORK OF SELECTION AND APPOINTMENT OF AGENTS, TRAINING, GUIDING AND MOTIVA TING AGENTS, ETC. 4 ITA NO.525/RJT/2013 (A.Y: 2008-09) SHRI KAMLESH C. BHAGDEV THEREFORE, THE EXPENSES INCURRED BY THE ASSESSEE AR E WHOLLY, NECESSARILY AND EXCLUSIVELY IN PERFORMANCE OF THE D UTIES OF A DEVELOPMENT OFFICER. HE SUBMITTED THAT THE REVENUE AUTHORITIES HAVE FAILED TO APPRECIATE THE DUTIES AND FUNCTIONS OF DE VELOPMENT OFFICER AND THEREFORE DENIED THE CLAIM OF THE ASSESSEE, WHICH I S UNJUSTIFIED. 9. AS FAR AS CLAIM OF EXPENSES OF RS.1,63,646/- IS CONCERNED, IDEAL SITUATION WOULD THAT THE ASSESSEE SHOULD FILE A CER TIFICATE FROM THE LIC ITA NO.526/RJT/2013 - 10 - DETERMINING EXPENSES INC URRED BY HIM FOR THE PURPOSE OF PROCURE LIC BUSINESS. NO SUCH CERTIF ICATE HAS BEEN SUBMITTED, HENCE, IT MAKES OUR JOB VERY DIFFICULT. WE COULD HAVE REMITTED THIS MATTER BACK TO THE FILE OF AO, BUT WE FIND THA T ASSESSEE, SHRI GIRIRAJSINH M. JHALA HAD ALREADY EXPIRED ON 19.3.20 15. THIS LITIGATION IS BEING PURSUED BY THE WIDOW. IT WILL BE QUITE DIFFIC ULT FOR THE WIDOW TO LAY HER HAND ON ALL THE DETAILS FROM THE OFFICE OF LIC. THEREFORE, CONSIDERING SMALLNESS OF THE AMOUNT INVOLVED IN DISPUTE AND THE HARDSHIPS, WE DEEM IT APPROPRIATE TO ESTIMATE THE EXPENDITURE WHI CH MIGHT HAVE BEEN INCURRED BY THE ASSESSEE FOR PROCURING THE BUSINESS . THE LD.REVENUE AUTHORITIES HAVE NOT APPRECIATED SPECIFIC TYPE OF D UTIES OF DEVELOPMENT OFFICER. IN ORDER TO EARN INCENTIVE BONUS, ASSESSEE HAS TO INCUR CERTAIN EXPENDITURE AND THEREFORE CLAIMING AN EXPENDITURE O F RS.163,646/- SPECIFIC TO THE TASK, OUT OF RS.6,06,097/- CANNOT B E DOUBTED TO BE NOT SPENT WHOLLY AND EXCLUSIVELY IN PERFORMANCE OF HIS DUTIES. THEREFORE, TAKING INTO CONSIDERATION PECULIAR FACTS OF THE CAS E, AND SPECIFIC NATURE OF WORK AND DUTIES ASSOCIATED WITH DEVELOPMENT OFFI CER, WE ARE NOT INCLINED TO SUSTAIN THE ADDITION MADE BY THE REVENU E AUTHORITIES ON THIS ISSUE. ACCORDINGLY, ADDITION OF RS.1,63,646/- IS DE LETED AND THUS, PART OF GROUND OF APPEAL IS ALLOWED. 10. IN THE RESULT, APP EAL OF THE ASSESSEE IS ALLOWED. 5. IN VIEW OF ABOVE, WE HOLD THAT BOTH THE ISSUES/G ROUNDS ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF CO-ORDINA TE BENCH OF TRIBUNAL DATED 26.09.2018 (SUPRA). THEREFORE, RESPECTFULLY FOLLOWING THE SAME BOTH THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 6 TH NOVEMBER, 2018 RAJKOT/ ; & / DATED : 26 TH NOVEMBER, 2018/ EDN, SR. P.S SD/- SD/- ( . . /O.P.MEENA) / ACCOUNTANT MEMBER ( . . /C.M.GARG) /JUDICIAL MEMBER 5 ITA NO.525/RJT/2013 (A.Y: 2008-09) SHRI KAMLESH C. BHAGDEV # %& '& / COPY OF THE ORDER IS FORWARDED TO : 1. * / THE APPELLANT ; 2. +,* / THE RESPONDENT ; 3. . ( ) / THE CONCERNED CIT(A); 4.THE CONCERNED PRL. CIT; 5. / + , , / DR, ITAT, / RAJKOT; 6. / GUARD FILE . // BY ORDER // ASSISTANT REGISTRAR, ITAT, RAJKOT BENCH, RAJKOT