Shri Solanki Amrutlal Rudabhai, RAJKOT-GUJARAT V. The Dy. Commr. Of Income Tax, Cir.-2, JUNAGADH

ITA 724/RJT/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1014 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 11-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUH A SH MISTRY
• Keywords: Search and seizure; Salary income
• Section: 143(3); 10(14); 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS . MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO . 724 /RJT /2014 / ASSTT. YEAR : 2010 - 20 11 SOLANKI AMRUTLAL RUDABHAI , C/O. PARENTS PRESENT , B/H. BUS STAND , NR. JASANI SCHOOL, MANAVADAR. PAN: AFBPS0283H VS . D.C.I.T. , CIRCLE - 2 , JUNAGADH . (APPLICANT) (RESPON D ENT) ASSESSEE BY : NONE REVENUE BY : SHRI SUH A SH MISTRY , SR .D R / DATE OF HEARING : 18 / 10 / 201 9 / DATE OF PRONOUNCEMENT: 17 / 12 /201 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV , RAJKOT DATED 08/10/2014 ( IN SHORT LD.CIT(A) ) ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DT. 27 /12 /2012 RELEVANT TO THE ASSESSMENT YEAR 2010 - 2011 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.724 /RJT/2014 ASSTT. YEAR 2010 - 11 2 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DISMISSING THE APPEAL OF THE ASSESSEE. THE APPEA L NEEDS TO BE ALLOWED. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DISMISSING THE APPEAL OF THE ASSESSEE WITHOUT CONSIDERING PROPERLY THE SUBMISSIONS MADE BEFORE HIM AND ALSO MENTION IN THE STATEMENT OF FACTS FILED BEFORE HIM. THE APPEAL NEEDS TO BE ALLOWED. 3. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DISMISSING THE APPEAL OF THE ASSESSEE WITHOUT CONSIDERING THE BIFURCATION / BREAK UP OF DETAILS OF SALARY ISSUED BY THE LIC. THE APPEAL NEEDS TO BE ALLOWED. 4. TAKING INTO CONSIDERATION THE OVER ALL FACTS AND BREAKUP OF DETAILS OF SALARY THE CLAIM MADE BY THE APPELLANT OUGHT TO HAVE BEEN ACCEPTED TAKING INTO CONSIDERATION THE CHANGES MADE BY THE LIC IN GRANTING VARIOUS ALLOWANCES. THE APPEAL FILED BY THE ASSESSEE OUGHT TO HAVE BEEN ALLOWED. 5. WITHO UT PREJUDICE, THE ASSESSMENT PROCEEDINGS ARE BAD IN LAW DESERVES ANNULMENT. 6. WITHOUT PREJUDICE, NO REASONABLE OPPORTUNITY HAS BEEN GIVEN BY THE LD. CIT(A) WHILE COMPLETING ASSESSMENT. THE SAME NEEDS ANNULMENT. 7. WITHOUT PREJUDICE, THE ASSESSMENT MADE BEING ILLEGAL, VOID, BAD IN LAW AND AGAINST STATUTORY PROVISIONS, NEEDS ANNULMENT. 8. WITHOUT PREJUDICE, THE CLAIM OF THE ASSESSEE DISALLOWED BY THE LD. CIT(A) IS ALLOWABLE AS PER C.B.D.T'S DIRECTION. 9. WITHOUT PREJUDICE, THE CLAIM OF THE ASSESSEE DISALLOWED BY THE LD. CIT(A) IS ALLOWABLE AS PER HON. SUPREME COURT DECISION IN THE CASE OF SHRI N.T. BHUPTANI. THE DISALLOWANCE NEEDS DELETION. 10. WITHOUT PREJUDICE, NO ADEQUATE, SUFFICIENT AND REASONABLE OPPORTUNITY HAS BEEN PROVIDED WHILE PASSING ASSESSMENT ORDER. THE ASS ESSMENT NEEDS ANNULMENT. 11. WITHOUT PREJUDICE, NO ADEQUATE, SUFFICIENT AND REASONABLE OPPORTUNITY HAS BEEN PROVIDED WHILE PASSING APPEAL ORDER. THE ASSESSMENT NEEDS ANNULMENT. 12. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND AND/OR SUBSTITUTE ANY OR ALL GROUND OF APPEAL BEFORE THE ACTUAL HEARING TAKES PLACE. 2. THE EFFECTIVE ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF 3,77,335.00 ON ACCOUNT OF THE EXPENDITURES INCURRED AGAINST THE INCENTIVE BONUS. 3. PERTINENT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DEVELOPMENT OFFICER WORKING WITH L IFE I NSURANCE CORPORATION OF INDIA. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS RECEIVED THE INCENTIVE BONUS OF 12,57,784.00 FROM THE LIC OF INDIA. THE ASSESSEE AGAINST SUCH INCENTIVE BONUS HAS CLAIMED DEDUCTION OF ITA NO.724 /RJT/2014 ASSTT. YEAR 2010 - 11 3 3,77,335 .00 BEING 30 PERCENT OF 12,57,784.00. AS PER THE ASSESSEE, HE HAS INCURRED THE EXPENSES AS DEVELOPMENT OFFICER OF LIC TO RECRUIT THE LIC AGENTS, DEVELOPMENT OF THE AGENTS, THEIR ARRANGEMENT, T EAM - WORK AND FIELD WORK EXPENSES. BUT , THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF SUCH EXPENSES. 3.1 HOWEVER , THE AO WAS OF THE VIEW THAT THE IMPUGNED INCENTIVE BONUS IS PA RT OF THE SALARY AS PROVIDED UNDER SECTION 17 OF THE ACT. THE ASSESSEE RECEIVED SUCH BONUS FOR THE QUANTITY, QUALITY OR VOLUME OF THE WORK DONE BY HIM. AS SUCH THE AMOUNT OF INCENTIVE BONUS DOES NOT REPRESENT ANY ALLOWANCE OR REIMBURSEMENT OF EXPENSES PROV IDED BY THE EMPLOYER. ACCORDINGLY, HE DISREGARDED THE CONTENTION AND ADDED THE AMOUNT OF 3,77,335.00 TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) WHO CONFIRMED THE ORDER OF THE AO. BEING AGGRI EVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. AR BEFORE US FILED THE WRITTEN SUBMISSION AS REPRODUCED AS UNDER: 3. THE MATTER REGARDING DISALLOWANCE HAS BECOME FULLY COVERED BY THE DECISION OF HON. I.T.A.T E - BE NCH RAJKOT IN THE CASE OF SHRI RANMALBHAI R. RAJATIYA VIDE ORDER DATED 1 - 11 - 2018 (COPY ENCLOSED) WHERE THE HON. BENCH HAS FOLLOWED THE DECISIONS IN THE CASE OF NITIN T. BHUPTANI. THE HON. BENCH HAS BEEN PLEASED TO ALLOW THE APPEAL FOR STATISTICAL PURPOSE W ITH DIRECTION TO CONSIDER THE MATTER AS PER DIRECTION GIVEN IN THE ORDER. 4. THIS BEING AN IDENTICAL MATTER FULLY COVERED AS PER DECISIONS OF THE HON. ITAT E - BENCH RAJKOT, THE MATTER MAY KINDLY BE DECIDED IN FAVOR OF THE ASSESSEE WITH APPROPRIATE DIRECTIO N TO THE LD.A.O. 6. THE LEARNED DR BEFORE US VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. ITA NO.724 /RJT/2014 ASSTT. YEAR 2010 - 11 4 7. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT CASE RELATES TO THE DISALLOWANCE OF THE EXPENSES FOR 3,77,335.00 CLAIMED AGAINST THE INCENTIVE BONUS RECEIVED BY THE ASSESSEE FROM THE EMPLOYER. THE AO W AS OF THE VIEW THAT THE IMPUGNED AMOUNT OF INCENTIVE BONUS REPRESENTS THE SALARY INCOME AS PROVIDED UNDER SECTION 17 OF THE ACT. THEREFORE, NO DEDUCTION AGAINST SUCH INCENTIVE BONUS CAN BE PROVIDED FOR THE EXPENDITURE CLAIMED TO BE INCURRED AGAINST IT. THE VIEW TAKEN BY THE AO WAS SUBSEQUENTLY CONFIRMED BY THE LEARNE D C IT - A. 7.1 FROM THE PRECEDING DISCUSSION, WE NOTE THAT THERE IS NO PROVISION UNDER THE ACT AUTHORIZ ING THE ASSESSEE TO CLAIM THE DEDUCTION AGAINST THE INCENTIVE BONUS WHICH IS PART OF THE SA LARY AS PROVIDED UNDER SECTION 17 OF THE ACT. T HE IMPUGNED HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE H ON BLE APEX COURT IN THE CASE OF T.K. GINARAJAN VS CIT REPORTED IN 36 TAXMANN.COM 583 WHEREIN IT WAS HELD AS UNDER: 8. THAT APART, WHAT IS EXCLUDED UNDER SECTION 10(14) AS IT STOOD PRIOR TO 01.04.1989 IS THE EXPENSES INCURRED IN THE PERFORMANCE OF THE DUTY. IT IS FOR THE EMPLOYER TO CERTIFY THE ACTUAL EXPENSES INCURRED IN THE PERFORMANCE OF DUTY AND IN WHICH CASE, AS CLARIFIED BY THE CBDT, TO THAT EXT ENT, THE SAME SHALL NOT BE SHOWN AS PART OF SALARY. ON FACTS, AS CLEARLY NOTED IN THE JUDGMENT OF THE HIGH COURT OF KERALA, THERE IS NO CLAIM BY THE EMPLOYEE EITHER FOR REIMBURSEMENT OR EXCLUSION OF THE ACTUAL EXPENDITURE INCURRED IN PERFORMANCE OF THE DUT Y. THESE TWO DISTINCTIONS UNFORTUNATELY MISSED THE NOTICE OF THE HIGH COURT OF GUJARAT. THE COURT IN FACT WAS SWAYED BY THE LETTER WRITTEN BY THE LIC OF INDIA TO THE CBDT FOR CLARIFICATION THAT, TO THE EXTENT OF 40% OF THE INCENTIVE BONUS COULD BE EXEMPTED AS EXPENDITURE INCURRED FOR THE DEVELOPMENT OF BUSINESS WHICH MADE THEM ELIGIBLE FOR THE INCENTIVE BONUS. THE HIGH COURT OF GUJARAT FAILED TO TAKE NOTE OF THE REPLY BY THE CBDT THAT IT WAS FOR THE LIC OF INDIA TO REIMBURSE THE ACTUAL EXPENDITURE INVOLVED IN THE PERFORMANCE OF THE DUTY BY THE DEVELOPMENT OFFICERS AND TO THAT EXTENT THE SAME WAS NOT TO BE SHOWN AS SALARY. 9. COMPARTMENTALIZATION OF INCOME UNDER VARIOUS HEADS AND COMPUTATION OF THE TAXABLE PORTION STRICTLY IN ACCORDANCE WITH THE FORMULA OF DE DUCTIONS, REBATES AND ALLOWANCES ARE TO BE DONE ONLY AS PER THE SCHEME PROVIDED UNDER THE ACT. AS HELD BY THIS COURT IN KARAMCHARI UNION V. UNION OF INDIA [2000] 3 SCC 335, THE INCOME - TAX ACT, 1961 IS A SELF CONTAINED CODE AND TAXABILITY OF THE RECEIPT OF ANY AMOUNT OR ALLOWANCE HAS TO BE DETERMINED ON THE BASIS OF THE MEANING GIVEN TO THE WORDS OR PHRASES GIVEN IN THE ACT. THUS, WE DO NOT AGREE WITH THE VIEW TAKEN BY THE HIGH COURT OF GUJARAT IN KIRANBHAI'S CASE ( SUPRA ). THE SAME DOES NOT LAY DOWN THE CORR ECT PRINCIPLE OF LAW. 10. THOUGH LEARNED COUNSEL FOR THE APPELLANT MADE A PERSUASIVE ATTEMPT TO PLACE RELIANCE ON THE DECISION OF THIS COURT IN STATE OF WEST BENGAL V. TEXMACO LTD. [1999] 1 SCC 198, WE ARE AFRAID THE SAME IS OF NO ASSISTANCE TO THE APPELLA NT. THE INCENTIVE BONUS REFERRED TO IN THE SAID DECISION IS THE SPECIAL SCHEME OF THE COMPANY. THE QUESTION CONSIDERED IN THE SAID DECISION WAS AS TO WHETHER THE SAID BONUS WOULD FORM PART OF SALARY AS DEFINED ITA NO.724 /RJT/2014 ASSTT. YEAR 2010 - 11 5 UNDER THE WEST BENGAL STATE TAX ON PROFESSIONS , TRADES, CALLINGS AND EMPLOYMENTS ACT, 1979. THIS COURT HELD, PLACING RELIANCE ON THE DEFINITION OF 'SALARY' IN THE SAID ACT THAT ONLY IN CASE THERE WAS REMUNERATION ON A REGULAR BASIS, THE SAME WAS EXIGIBLE TO TAX UNDER THE SAID ACT. ON FACTS, IT WAS FOU ND THAT THERE WAS NO REGULAR PAYMENT OF INCENTIVE BONUS. THAT IS NOT THE FACTUAL OR LEGAL POSITION IN THE CASE OF THE APPELLANT UNDER THE ACT AND, THEREFORE, THE SAID DECISION IS NOT RELEVANT AT ALL FOR THE PURPOSE OF THIS CASE. 11. THE APPELLANT BEING A SALARIED PERSON, THE INCENTIVE BONUS RECEIVED BY HIM PRIOR TO 01.04.1989 HAS TO BE TREATED AS SALARY AND HE IS ENTITLED ONLY FOR THE PERMISSIBLE DEDUCTIONS UNDER SECTION 16 OF THE ACT. THE EXPENSES INCURRED IN THE PERFORMANCE OF DUTY AS DEVELOPMENT OFFICER FOR GENERATING THE BUSINESS SO AS TO MAKE HIM ELIGIBLE FOR THE INCENTIVE BONUS IS NOT A PERMISSIBLE DEDUCTION AND, HENCE, THE SAME IS EXIGIBLE TO TAX. THERE IS NO MERIT IN THE APPEAL. THE APPEAL IS ACCORDINGLY DISMISSED. NO COSTS. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AUTHORITIES BELOW. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. O RDER PRONOUNCED IN THE COURT ON 17 /12 / 2019 AT AHMEDABAD. - SD - - SD - (MS MADHUMITA ROY ) (WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 17 / 12 /2019 MANISH