1984 (2) TMI 179

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..... nd other expenses aggregating to Rs. 44,340. The ITO included the conveyance allowance and allowed expenses treated as proved only to the extent of Rs. 32,460. The assessee acquiesced to this order. The Commissioner was, however, of the view that no expenditure was admissible as the assessee's income was liable to be taxed only under the head 'Salaries'. He, accordingly, withdrew the deduction of Rs. 32,460 actions under section 263. However, in a separate order under section 264 of the Act, he realised that the inclusion of conveyance allowance was palpably wrong inasmuch as the assessee had spent much more on conveyance than the allowance. He, therefore, excluded proved conveyance allowance of Rs. 13,325 as against reported conveyance all .....

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..... 40 per cent after considering all the relevant facts. There is no material placed before us to upset these inferences. It is under these circumstances that we find no merit in the departmental appeal." No doubt, the Commissioner was of the view that the entire income was taxable as salary and that no deduction is possible. Even granting that the income is taxable only as salary, incentive bonus itself is an allowance and the part relating to expenses wholly, necessarily and exclusively incurred for the performance of his duties of employment has to be treated as special allowance covered by section 10(14) of the Act. Any other view would result in hardship which cannot be justified either on facts or on the basis of statute. What is conte .....

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..... n as mentioned earlier. Under the circumstances, there was no case for interference with the order of the ITO. 5. The objection taken by the Commissioner is that no deduction other than those specifically permitted by law is allowable against salary income. It is so. But the finding here is that the incentive bonus includes an allowance either to the extent proved reasonably at 40 per cent thereof which is exempt under section 10(14). In this view, there is no legal infirmity in the order of the ITO. In this view, we are not going into the larger question whether the incentive bonus could be treated as salary income, though such amount is much larger than salary. It is possible to argue, as was done by the assessee, that he stands, as a d .....

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