TaxTMI 
TaxTMI 
1998 (6) TMI 30
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....5 ITR 514, has held that in the absence of any notification issued by the Central Government under section 10(14)(i) granting exemption the incentive bonus and additional conveyance allowance are liable to be assessed to tax as salary. This court also held that such bonus and the additional allowance are part of the salary of the employee having regard to the terms used in sections 16 and 17 of the Income-tax Act, 1961. A view similar to the one taken by this court has been taken by the Andhra Pradesh High Court in the case of K A. Choudary v. CIT [1990] 183 ITR 29, by the Rajasthan High Court in the case of CIT v. Shiv Raj Bhatia [1997] 227 ITR 7, as also by a Full Bench of the Karnataka High Court in the case of CIT v. M. D. Patil [1998]....
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....they are not amounts which can be regarded as exempt from the levy of income-tax. The materials placed before the court by the respective counsel show that the Development Officers are whole time employees of the Life Insurance Corporation of India, who are required to discharge the duties and obligations which, inter alia, include the development of the life insurance business of the Corporation. The very first duty enumerated for the Development Officer is "to develop, to increase the production of new insurance business in the planned way as far as may be practicable in the area that may be allotted to him from time to time". The other duties and obligations include the duty to supervise and to guide the activities of agents placed unde....
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.... year exceeds the prescribed cost ratio, he shall be subject to one or more disincentives. The disincentives are graded in clause 5.2 of the instructions as 50 per cent. cut in conveyance allowance, in addition, to no increment, and one, two or three decrements in basic pay. Clause 5.3 of the instructions states that the appropriate disincentive will depend on the extent by which the actual cost ratio in the appraisal year is in excess of the prescribed cost ratio for that year. It will also depend upon whether the actual cost ratio has exceeded the prescribed cost ratio for the first, second, third or subsequent year in succession. The instruction also provides for incentive bonus payable to those whose cost ratio is less than 20 per cent....
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.... time employees of the Corporation whose main task is to develop the business of life insurance. Such development is measured by the amount of premium secured in the first year on new policies by reason of efforts put in by the Development Officer. The efficiency of the Development Officer is judged with reference to the amount of the first year premium that he generates and if the amount of premium so generated is at least five times the amount of yearly expenses incurred by the Life Insurance Corporation of India on the Development Officer, his performance is regarded as satisfactory. With a view to encourage the Development Officer to rise above that minimum standard, the officers are given incentives. If the performance falls below the ....
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....arry out. Learned counsel for the assessee submitted that the additional amount earned by the Development Officer as incentive bonus is earned solely on account of the efforts voluntarily put in and, therefore, the amounts earned as a result of such voluntary effort do not stand on the same footing as the salary received for performing normal duties at the level of efficiency prescribed as minimum. It was contended that the amount so received by the officer for his more efficient performance of the work by way of incentive is in fact in the nature of a profit which has been earned and that profit cannot be treated as part of the salary income and assessed as such. This argument proceeds on the premise that an employee even while performing....
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....hat found favour with the Gujarat High Court. Profits, fees, commissions and perquisites referred to in section 17(1)(iv) may be in lieu of or in addition to regular salary or wages. They are all as such taxable as regular salary or wages. A lumpsum paid in lieu of a taxable benefit is equally taxable. The payment must be a reward or return for his acting as an employee. Incentive bonus cannot in any view be properly regarded as "profit" for the earning of which expenditure is required to be incurred and which expenditure can be claimed as a deduction. It can at best be regarded as a commission as it is calculated as a percentage of the premium generated. No deduction thereafter is permissible while computing the total income of the assess....