TaxTMI 
TaxTMI 
1992 (5) TMI 40
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..... 60,000 he allowed deduction of 50%. The material part of the Board's Circular is as follows: "Sub: Commission earned by insurance agents of the LIC—Taxation of allowance of expenditure. Attention is invited to Board's Circular dt. 14th Sept., 1965 issued from F. No. 14/9/65-IT(A1) on the subject. It has been mentioned in that instruction inter alia that where detailed accounts regarding expenses incurred by the insurance agents are not maintained an ad hoc deduction for expenses at the rate of 40% of the first year's commission should be allowed. A ceiling of Rs. 6,000 in respect of such expenditure where the gross insurance commission do not exceed Rs. 20,000 was laid down and the discretion to grant larger allowance not exceeding ....
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....ial circumstances to justify deduction beyond the aforesaid ceiling, the ITO may grant a larger allowance but not exceeding Rs. 10,000. For this purpose the ITO may take into account such factors as whether the agent's insurance activity is on a part time basis or professional basis, whether a regular establishment is maintained, whether the business is new or established, etc. (3) If an agent has to incur expenditure in excess of the above limits and desires allowance thereof, he should be able to maintain regular accounts of his receipts and expenses and claim the expenditure on the basis of the said accounts. Similarly, in cases where the agents maintain complete and reliable accounts, the assessment would, of course, be made on the ....
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....equent years. Secondly, he submitted that the deposits in the Public Provident Fund scheme clearly brought out this meaning. 5. I am unable to accept the contentions of the assessee's advocate. Although in the second paragraph the words are "year's commission", the context makes it very clear that they relate to the first year's commission. The representations referred to in the second paragraph mentioned 40% which is the commission payable for the first year according to the earlier circular. The first paragraph makes a clear reference to 40% for the first year's commission. This was the reason given in the earlier order of the Tribunal. Secondly, the purpose of the second circular was not to completely substitute the first circular but ....