JUDGMENT
B. R. ARORA, J. :
The Tribunal, Jaipur Bench, Jaipur, for the asst. yr. 1985-86, in the case of the assessee, by its order dt. 28th Dec., 1989, referred the following question of law, under s. 256(1) of the IT Act, 1961, for the opinion of this Court :
“Whether, on the facts and in the circumstances of the case, the learned Members of the Tribunal were justified in directing the ITO to allow 50% deduction of incentive bonus received by the assessee from LIC of India relying on Boards Circular No. 14\9\65-IT(A. I) dt. 22nd Sept., 1965 which in fact is applicable to LIC agents and not for Development Officer ?”
2. The assessee was working as the Development Officer with the LIC of India and was posted at Pali. The assessee, during the asst. yr. 1985-86, received an amount of Rs. 55,160 as the incentive bonus from the LIC of India. He claimed a deduction on this amount. The ITO Pali, by its order dt. 28th Feb., 1986, disallowed the deduction on the amount of incentive bonus by holding that the incentive bonus is simply an extra remuneration received by the employee for which he had not to spend any amount. The definition of the term salary clearly includes such remuneration and extra remuneration in its fold and hence it is clearly taxable. Dissatisfied with the order dt. 28th Feb., 1986 passed by the ITO, disallowing the deduction on the amount of the incentive bonus, the assessee preferred an appeal before the AAC, Jodhpur. The appeal filed by the assessee relating to the deduction on the amount of Rs. 50,160 received by him by way of incentive bonus, was partly allowed by the AAC. The AAC allowed 20 per cent deduction on the amount of incentive bonus of Rs. 50,160 and dismissed the appeal so far as the remaining relief is concerned.
3. Aggrieved with the order dt. 27th May, 1987 passed by the AAC, the assessee preferred an appeal before the Tribunal, Jaipur Bench, Jaipur. The Tribunal, by its order dt. 21st Dec., 1988, relying upon the Circular of the Board regarding allowance of 50 per cent of the deduction in the case of LIC agents and on the basis of its own decision, allowed 50 per cent deduction on the incentive bonus. While allowing 50% deduction of incentive bonus, the Tribunal directed the ITO to allow 50 per cent deduction to the assessee on the amount of incentive bonus received by him from the LIC of India. Aggrieved with the order passed by the Tribunal, the Revenue moved an application under s. 256(1) of the Act for referring the questions of law mentioned in the application for the opinion of the High Court and the Tribunal, vide its order dt. 28th Dec., 1989 referred the above noted question for the opinion of this Court.
4. The Tribunal allowed the deduction @ 50 per cent on the amount of incentive bonus relying upon the Boards Circular.
5. The material facts, on which the question mentioned in para 1 above has to be decided is similar to those in DBIT Ref. No. 8 of 1992 – CIT vs. Shiv Raj Bhatia [reported at (1996) 133 CTR (Raj) 379]. The controversy involved in the present case as well as in the case of Shiv Raj Bhatia is that the incentive bonus received by the Development Officer of the LIC whether can fall within the meaning of the words salary, perquisites or profits in lieu of salary and as such is taxable under the head salary or it is an income from business or profession on which the assessee is entitled for deduction in respect of the amount which he spent for procuring the business to earn the incentive bonus and whether the Boards Circular No. 14/9/65-IT (A-I) dt. 22nd Sept., 1965, which, in fact, is applicable to the LIC agents, is applicable to the Development Officer or not ? It has been held in CIT vs. Shiv Raj Bhatias case decided by us today, that the incentive bonus paid to the Development Officer is not the personal gift but is paid as remuneration for his services as the employee and, therefore, it forms the part of the salary. As the incentive bonus is the part of the salary of the assessee and is exigible to tax and the assessee is entitled only for the standard deduction permissible under s. 16 of the Act only. It has further been held in Shiv Raj Bhatias case that the Boards Circular No. 14/9/65-IT (A-I) dt. 22nd Sept., 1965, which relates to the agents of the LIC only, is not applicable in the case of the Development Officers.
6. The question of law referred for the opinion of this Court, mentioned in para 1 above, is identical to that which was referred for the opinion of this Court in Shiv Raj Bhatias case and this Court, in Shiv Raj Bhatis case answered the question in the negative, i.e., in favour of the Revenue and against the assessee. For the same reasons, the above quoted question No. 1 is answered in favour of the Revenue and against the assessee in the same manner.
7. Consequently, the reference is answered in negative, i.e., in favour of the Revenue and against the assessee and it is held that the Tribunal, Jaipur Bench, Jaipur was not justified in directing to allow 50 per cent deductions of the incentive bonus received by the assessee from the LIC of India, relying on the Boards Circular which is applicable only to the LIC agents and not to the Development Officers and the case of the Development Officers are governed by the Boards Circular No. 1774.