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Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI R.S. SYAL
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.
The only issue raised in this appeal is against the confirmation of disallowance of Rs.2,61,854/- out of incentive bonus.
Briefly stated, the facts of the case are that the 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 deduction of Rs.2,61,854/- was claimed by relying on the judgment of the Hon'ble Gujarat High Court in the case of Chimanbhai H. Patel (1998) 99 Taxman 63 (Guj). The Assessing Officer refused to allow such deduction and 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.
I have heard the rival submissions and perused the relevant material on record. The only issue is about the admissibility or otherwise of deduction for expenses amounting to Rs.2,61,854/- against the incentive bonus received by the assessee. It is seen that the 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 by 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 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 itself issued a clarification to the effect that the Development Officers would be entitled to claim reimbursement to the extent of 30% of the incentive bonus granted to them. Thus, the dispute is confined only to the period prior to 01.04.1989 and, thereafter, the Development Officers are entitled 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 bonus after reimbursing the expenses to the extent of 30% will appear in the salary certificate. What is the fate of the incentive bonus to the Development Officers in LIC prior to 01.04.1989 for the purpose of income-tax is the question to be considered in this case.’
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 to the period prior to 01.04.1989
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 incentive bonus which is actually spent by the Development Officer for duty of office can still be exempted from tax if the LIC makes the payment against which expenses incurred by the Development Officer by way of reimbursement 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/- by the assessee for meeting expenses of conveyance, being incurred wholly, necessarily and exclusively in the performance of duties as a Development Officer of a Corporation. However, there is no mention about the reimbursement of expenses by the LIC of India. There is no discussion 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 factor as the deduction is permissible only to the extent of expenses actually reimbursed. Under these circumstances, I set aside the impugned order and remit the matter to the AO for examining the aspect of reimbursement of expenses by LIC of India and then reduce the chargeable income accordingly.