COMMISSIONER OF INCOME TAX vs. AMRUTLAL RAVJIBHAI PATEL

O/TAXAP/819/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 819 of 2007 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 ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus AMRUTLAL RAVJIBHAI PATEL....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 RULE SERVED for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 16/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. This is an appeal by the appellant- Revenue, seeking to assail the order of the learned ITAT, Ahmedabad Bench ‘C’ (for short, ‘The Tribunal’), Dated : 11.09.2006, rendered in Page 1 of 5

O/TAXAP/819/2007 JUDGMENT ITA No.1717/Ahd/2006 for A.Y. 2003-04, whereby, the Tribunal dismissed the appeal of the Revenue. 2. The brief facts leading to the filing of the present appeal are that the assessee- Respondent, herein, filed his return of income for the A.Y. under consideration on 22.03.2004, declaring his total income at Rs.6,45,540/-. The case of the assessee was processed and he was issued notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961 (for short, ‘the Act’). Subsequently, the concerned AO made certain additions / disallowances and assessed the net taxable income of the assessee at Rs.7,92,390/-. The assessee, hence, approached the CIT(A) by way of an appeal, which came to be allowed in part. Being aggrieved with the same, the Revenue preferred an appeal before the Tribunal, wherein, the Tribunal passed the impugned order. Hence, the present appeal. 3. At the time of admitting the present appeal, this Court framed the following question of law; “Whether the Appellate Tribunal is right in upholding the order of the CIT(A) on the issue of allowability of deduction out of Incentive Bonus forming part of salary without appreciating the fact that the assessee Page 2 of 5

O/TAXAP/819/2007 JUDGMENT has received reimbursement of expenses separately which have not been included in salary income?” 4. Mr. Mehta, learned Advocate for the appellant-Revenue, at the outset, submitted that the question framed in this appeal is no more res integra and the same is answered in favour of the Revenue by the Apex Court vide its decision in “T.K. GINARAJAN VS. CIT”, [2013] 356 ITR 618 (SC), wherein, the apex Court has observed that in the case of salaried persons, the only permissible deduction is under Section 16 of the Income-tax Act, 1961. The Apex Court, further, observed and held that the incentive bonus paid to the employee by the employer is nothing but ‘salary’, which is covered by the exhaustive definition of salary in Section 17(1) of the Act, and therefore, incentive bonus paid to Development Officers by the Life Insurance Corporation of India would form part of salary and would thus be exigible to income-tax. 5. From the record it appears that, in the case on hand also, the assessee was serving as Development Officer with LIC of India and as per the computation of income supplied by him along with the return filed for the A.Y. 2003-04, he had received Rs.8,92,175/- towards gross salary. Out of the same, he claimed exemption of an Page 3 of 5

O/TAXAP/819/2007 JUDGMENT amount of Rs.60,175/- received by him towards Conveyance & Additional Conveyance allowance to the total Incentive Bonus Commission and another deduction of RS.1,46,859/-, i.e. the 30 per cent, by relying on a decision of this Court in the case of “CIT VS. KIRANBHAI H. SHELAT”, [1999] 235 ITR 635 (Guj.). However, now, the Apex Court has overruled the aforesaid decision of this Court and has held that only permissible deduction available to a salaried person is under Section 16 and under no other provision of the Act. 6. Mr. Hemani, learned Advocate for the respondent-assessee, is not in a position to point out any other judgment of the Apex Court, taking a contrary view to the one taken by it in the case of “T.K. GINARAJAN VS. CIT”(Supra). 7. Under the circumstances, since, the issue is already answered by the Apex Court in favour of the Revenue, we do not propose to make any further observations in this regard and the present appeal deserves to be allowed. 8. In the result, present appeal is ALLOWED. The orders passed by the CIT(A) as well as the Tribunal stand quashed and set aside. The question, i.e. Whether on the facts and in law the Appellate Tribunal is right in upholding the order of the CIT(A) on the issue of allowability Page 4 of 5

O/TAXAP/819/2007 JUDGMENT of deduction out of Incentive Bonus forming part of salary without appreciating the fact that the assessee has received reimbursement of expenses separately which have not been included in salary income?, is answered in FAVOUR of the appellant- Revenue and AGAINST the respondent-assessee, accordingly. No order as to costs. (K.S.JHAVERI, J.) (K.J.THAKER, J) UMESH Page 5 of 5