TaxTMI 
TaxTMI 
1982 (2) TMI 116
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....o know that cross-objections had not been filed because of the death of the advocate. We have very carefully looked into the circumstances and condone the delay in filing the cross-objections. In our opinion, the delay was due to a reasonable cause. 3. In order to appreciate the respective grievances of the parties before us in appeal and cross-objections, it is necessary to record the facts which are necessary to determine the issues involved and from which, in fact, the issue emanate. 4. Shri Raj Kumar Sethi is an employee of the LIC of India. During the accounting period relevant to the assessment years under appeal, he was employed as development officer of Life Insurance Corporation of India, Ludhiana. According to the managing director of the LIC, Central Office, Yogakshema, Jeevan Bima Marg, Bombay 20, the norms of working of development officer, as also explained by the Morarka Committee, essentially are that they are field workers. They have to contact agents as well as prospective policy holders in the field. The remuneration and prospects of development officers, therefore, are related to the results of the efforts they put in (page 5 of the paper book). Though the....
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....Rs. 34,534.25. During the course of assessment proceedings, the assessee made a claim that out of the incentive bonus received for each of the assessment years under appeal mentioned supra, he should be allowed deduction for expenses incurred to the extent of 40 per cent. However, the ITO rejected this claim of the assessee on the ground that standard deduction provided under section 16(1) of the Income-tax Act, 1961 ("the Act"), could only be allowed to the assessee because "the assessee is first and foremost a salaried person and all the relevant perks attached to his post are provided by virtue of his employment". The assessee has pointed out to the ITO that he had expended money for securing record business of Rs. 74,17,000 on 513 lives during the year ending 31-3-1976 and had maintained, inter alia, an employee for earning the incentive bonus, etc. The ITO, however, rejected the entire claim on the ground that he was not supposed to keep any employee for earning salary/allowance. 8. For the assessment year 1978-79, the above decision arrived at by the ITO was applied and the claim of the assessee for deduction of 40 per cent expenses against the incentive bonus was rejected....
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.... be allowed to the assessee. The assessments have been framed by the ITO keeping this principle in view and, therefore, when the AAC issued directions to the ITO to allow 20 per cent of the gross incentive bonus as expenses, he erred both on the facts and in law. In the alternative, without concession, it was argued that there is no basis for which the expenses have been allowed at 20 per cent by the AAC. It was contended that the expenditure had not been shown to have been incurred. The order of the AAC is, therefore, erroneous and may be set aside and that of the ITO for each of the assessment years restored. 10. Opposing these submissions, the learned counsel for the assessee submitted that no doubt the assessee holding the rank of development officer of LIC is an employee of the Corporation, yet all the payments that he receives from the Corporation cannot be termed as salary because his salary is minimum fixed and thereafter certain payments like the incentive bonus are entirely, depending upon the personal efforts, made in the field to secure additional insurance business for his employer. The incentive bonus, therefore, cannot form part of the salary and, therefore, the d....
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.... be seen from a plain reading of section 15 that there is no mention of bonus in this section. Section 17 of the Act gives definition of salary for the purposes of sections 15 and 16 of the Act. As noted above, section 15 connotes as to what is chargeable to income-tax under the head "Salaries". Section 16 gives deductions from salaries and it is section 17 which, for the purpose of sections 15 and 16, defines "salaries". The definition of salary is inclusive and is contained in section 17(1) which is as under : "(1) 'salary' includes--- (i) wages ; (ii) any annuity or pension; (iii) any gratuity ; (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages: (v) any advance of salary ; (vi) the annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule ; and (vii) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the exten....
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....wances and perquisites and that bonus is in the nature of an allowance and, therefore, for the purpose of section 40(c) salary would not include bonus. In that case, according to the revenue bonus did not form even an integral part of salary. 13. In the case before us, incentive bonus was earned by the assessee by performance of field duties in securing insurance policies for the corporation. For the year ending 31-3-1976, he introduced record business of Rs. 74,17,000 on 513 lives and emerged as the leader of Chandigarh Division. This is recognition of the efforts put in beyond the call of duty to earn as a recompense for such efforts. In fact the assessee acts in a duel capacity. He is an employee of the Corporation for earning the basic salary which he has himself shown as salary income but for earning the incentive bonus, which is neither covered by the Payment of Bonus Act nor otherwise a part of salary as per conditions of employment, he has to put in efforts in propagating the virtues of insuring lives and securing business which forms the base for earning the incentive bonus. He is thus an agent of the corporation insofar as this sector of his activity is concerned and t....