Incentive bonus taxable as salary, with no separate expense deduction beyond the statutory allowance.

Incentive bonus received by a Development Officer of LIC is treated as salary income, not as business income. Once the bonus is assessable under the head "Salaries," the statutory deduction under section 16(i) of the Income-tax Act, 1961 applies, and no further deduction for expenditure said to have been incurred in earning the bonus is permissible. The legal position follows the earlier view that the character of the receipt, rather than the employee's duty-related , determines the applicable head of income and deductions. The issue is resolved in favour of the Revenue and against the assessee.

---

---

Issues: Whether incentive bonus received by a Development Officer of the Life Insurance Corporation of India is assessable under the head "Salaries" and whether any separate deduction for expenditure incurred in earning such bonus is permissible.

Analysis: The question was decided by following the earlier view that incentive bonus forms part of salary income and is not taxable under the head "Profits and gains of business or profession". Once assessed under "Salaries", the statutory deduction admissible under section 16(i) of the Income-tax Act, 1961 applies, and no further deduction for alleged expenditure incurred in performing duties can be claimed.

Conclusion: The incentive bonus is assessable under the head "Salaries", and no separate deduction for expenditure is allowable; the issue is decided in favour of the Revenue and against the assessee.

---