2016 (3) TMI 1444 - AT - Income Tax

Addition of Additional Conveyance Allowance - HELD THAT - We find that the first issue about additional conveyance allowance granted to DO of LIC is covered in favour of the assessee by this tribunal orderin the case of S. N. Mishra 1998 (12) TMI 111 - ITAT JABALPUR this issue is covered in favour of the assessee. Addition on account of expenses incurred for the business of LIC to the extent of 40% of Incentive Bonus received from LIC - Instead of 40% as claimed by the assessee, deduction can be allowed to the extent of 30% of incentive bonus if it is found that the assessee has been able to establish that to that extent, actual expenses were incurred for increase of the business of LIC. Neither the A.O. nor the learned DR of the revenue could point out that any expenses out of Rs. 13,41,092.94 is not incurred for increase of the business of LIC. Under these facts, by respectfully following this judgment of T. K. Ginarajan 2013 (8) TMI 261 - SUPREME COURT we hold that to the extent of 30% of incentive bonus which comes to Rs. 921,736/- should be allowed as deduction from Incentive bonus as against deduction of Rs. 12,28,982/- claimed by the assessee on account of expenses incurred for the business of LIC to the extent of 40% of Incentive Bonus Rs. 30,72,453/- received from LIC. This issue is decided partly in favour of the assessee.

Summary

Issues:
1. Disallowance of Additional Conveyance Allowance
2. Disallowance of Expenses for LIC business

Analysis:
1. The appeal addressed two grievances raised by the assessee. The first issue pertained to the disallowance of Rs. 58,500/- claimed as Additional Conveyance Allowance. The assessee argued that the allowance was exempt as per the TDS certificate issued by LIC in Form No. 16. Citing a tribunal order in favor of the assessee, it was established that the conveyance allowance granted to a DO of LIC is exempt under section 10(14) to the extent actually spent and certified by LIC. The tribunal concurred with this view and decided in favor of the assessee.

2. The second issue involved the disallowance of Rs. 12,28,982/- claimed as expenses incurred for the business of LIC, based on 40% of the Incentive Bonus of Rs. 30,72,453/- received from LIC. The assessee contended that post-April 1, 1989, the issue was settled in their favor as per a judgment by the Hon'ble Apex Court. The tribunal noted that the dispute was limited to the period before April 1, 1989, and after this date, only the balance of the incentive bonus was to be treated as salary income. The assessee provided detailed expense breakdowns and supporting documents. Following the Apex Court's judgment, the tribunal allowed a deduction of 30% of the incentive bonus, amounting to Rs. 921,736/-, instead of the claimed 40%. It was established that the expenses were incurred for increasing the business of LIC, and no evidence was presented to refute this claim. Therefore, the tribunal partially decided in favor of the assessee.

In conclusion, the appeal was partly allowed, with the first issue resolved in favor of the assessee concerning the Additional Conveyance Allowance and the second issue partly in favor of the assessee regarding the expenses for the LIC business.