Jawahar Dhirajlal Dholakia V. Asstt. C I T

TAXAP/465/2000

AI Insights

The case involves Jawahar Dhirajlal Dholakia, a Development Officer at LIC of India, who appealed against the decision of the Income Tax Appellate Tribunal, Rajkot Bench. The Tribunal had directed the Assessing Officer to allow the actual expenditure incurred by the assessee for earning an incentive bonus, which the assessee claimed as a deduction under the head 'income from business and profession'. The main legal question was whether the Tribunal was correct in allowing such a deduction. The Supreme Court's decision in T.K. Ginarajan v. Commissioner of Income-tax, which concluded that incentive bonuses for salaried employees are part of salary and covered under section 17, was pivotal in the court's decision to dismiss the appeal.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 687607 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 05-11-2014
• Assessment Year: misc
• Other Referred Cases: T.K. Ginarajan v. Commissioner of Income-tax [2013] 356 ITR 618 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: PRANAV DESAI
• Assessee Lawyers: MANISH SHAH
• Keywords: Assessment Year 1991-92; Deduction; Incentive bonus; Income Tax; Salary
• Section: 17; 16

Judgement Text

"O/TAXAP/465/2000 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 465 of 2000 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ JAWAHAR DHIRAJLAL DHOLAKIA....Appellant(s) Versus ASSTT. C I T....Opponent(s) ================================================================ Appearance: MR MANISH J SHAH, ADVOCATE for the Appellant(s) No. 1 MR PRANAV G DESAI, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 4 O/TAXAP/465/2000 JUDGMENT Date : 05/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, the appellant has challenged the judgment and order dated 14.8.2000 passed by the Income Tax Appellate Tribunal, Rajkot Bench in ITA No. 694/Ahd/1993 for assessment year 1991-92. 2. While admitting the appeal, this Court has framed the following substantial question of law: “Whether the Tribunal was right in law in directing the Assessing Officer to allow the actual expenditure incurred by the assessee for earning incentive bonus after getting duly certified by the L.I.C. ?” 3. The brief facts of the case are that the return of income declaring a total income of Rs. 3,94,830/- was filed on 15.6.1991. The assessee is a Development Officer in LIC of India. During the year under account, the assessee has received incentive bonus amounting to Rs. 5,17,039/- and has claimed ad-hoc deduction of Rs. 2,06,816/- being 40% of the amount of bonus. The deduction has been claimed as per instructions no. 1546 and treating the incentive bonus under the head income from business and profession. A letter was Page 2 of 4 O/TAXAP/465/2000 JUDGMENT issued to the assessee on 21.1.1992 asking him why the deduction claimed be not disallowed because incentive bonus is a part of salary. The assessee in his written submission dated 27.1.92 has stated that his claim has been allowed by the CIT (Appeals) for AY 84-85 to 90-91 and the ITAT, Ahmedabad for AY 1981-82 and 82-83. 4. The learned advocate for the respondent has contended that in view of the decision of the Hon’ble Supreme Court in the case of T.K. Ginarajan v. Commissioner of Income-tax, reported in [2013] 356 ITR 618 (SC), the issue is concluded in favour of the assessee. It is held that in the case of salaried persons, the only permissible deduction is under section 16 of the Income-tax Act, 1961. Section 17 clearly provides for the details of income by way of salary. The incentive bonus paid to the employee by the employer is nothing but salary covered by the exhaustive definition of salary in section 17(1). The learned advocate for the respondent has submitted that however, he is not in a position to dispute the decision of the Hon’ble the Supreme Court. The amount paid or expenses incurred for the incentive is required to be allowed. In that view of the matter, the question is answered against the assessee and in favour of the Revenue. The present Tax Appeal is accordingly dismissed. Page 3 of 4 O/TAXAP/465/2000 JUDGMENT (K.S.JHAVERI, J.) (K.J.THAKER, J) mandora Page 4 of 4 "