Salary character of incentive bonus and conveyance allowance rejected as business income deductions were disallowed under revision.

Incentive bonus and additional conveyance allowance received by a LIC Development Officer were treated as salary income because the employer-linked payments fell within the binding judicial view applied in the commentary. Once the receipts were characterised as salary, deductions allowed on the assumption of business income could not stand. The revisionary orders were also supported on the basis that the assessments had been completed without proper enquiry into the service conditions and the true nature of the payments, making them erroneous and prejudicial to the Revenue. The assessee's challenge therefore failed.

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Issues: Whether incentive bonus and additional conveyance allowance received by a Development Officer of the Life Insurance Corporation of India constituted salary income, and whether the assessment orders allowing business expenditure deductions were erroneous and prejudicial to the interests of the Revenue so as to justify revision.

Analysis: The incentive bonus paid by the employer was held to form part of salary income in view of the binding High Court ruling applied in the order, which followed the Supreme Court's exposition on employer-linked payments. Once the receipts were treated as salary, the assessments allowing deductions on the footing of business income could not be sustained. The order also proceeded on the footing that the assessment had been made without proper enquiry into the service terms and the nature of the payments.

Conclusion: The revisionary orders were upheld and the assessee's challenge failed.

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