9911796707
TMI Blog2011 (12) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... Rejecting request for additional ground a legal ground on facts already on record. 2. Ld. CIT(A) erred in facts and in law in confirming order of ld. AO and completely over looked the objection challenging the validity and Jurisdictional Foundation for issuance Notice. 3. That ld. CIT(A) erred in facts and in law in confirming assessment framed u/s 148/143(3). 4. That proceedings initiated u/s 147 and confirmation of assessment on a mere change of opinion on the facts already disclosed by appellant is bad in law. 5. That case laws cited by the appellant has been completely ignored and case laws cited by ld. AO in the asstt. order are distinguishable and confirmation of assessment order is bad in law. 6. That conveyance allowance, additional conveyance allowance and incentive bonus are allowable as per provision of I.T. Act and decided case laws and certificates issued by LIC and confirmation of part additional conveyance allowance and entire expenses on incentive bonus are bad in law. 7. That confirmation of assessment framed and order passed by the ld. CIT(A) is bad in law." 3. The only ground effectively pressed is ground no. 6, which challenges the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(14). For that purpose, he also place reliance on Instruction No. 1738 dated 28.11.1986 and letter dated 12.03.1997 issued by CBDT. Reference was also made to ITAT SMC Branch order in the case of Mr. Acharya. 4. On careful consideration of various contentions of the assessee, we find that there is sea change in the provisions of sec. 10(14) introduced by the Finance Act, 1995 with effect from 01.07.1995. Therefore, from 01.07.1995 in order to be treated as exempt u/s 10(14), the reimbursement of any expenditure incurred by the employee must be one that has been prescribed under Rule 2BB of I.T. Rules, 1962. Secondly, as far as CBDT letter dated 12.03.1997 is concerned, From No. 16 does not fulfil the requirements and there has to be a certificate from LIC that the payment has been made against the expenses incurred by the Development Officer by way of reimbursement of expenses. Under these circumstances, we are of the view that it would do in fitness of things if both these appeals are restored to the file of the ld. CIT(A) for decision afresh in the light of sec. 10(14) and CBDT letter dated 12.03.1997 addressed to Chairman, LIC of India under F. No. 149/25/96-TPL. The ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he taxable 'incentive bonus' will appear in their salary certificates." "In the above letter clear guidelines have been issued in the matter of Incentive Bonus but the same logic apply to the other allowances also, that firstly to qualify for deduction, the expenses have to be actually incurred is to be verified by the employer and only then the reimbursement is to be made. Lastly the letter emphasis that in case LIC makes the payment against the expenses incurred by the Development Officer by way reimbursement will not form a part of the salary and only taxable 'incentive bonus' will appear in their salary certificates. I am, therefore, convinced that the claim of the appellant for allowing deduction of conveyance allowance, Addl. Conveyance allowance and incentive bonus has been rightly rejected by the AO. The additions made by the AO on account of conveyance allowance, Addl. Conveyance allowance and Incentive Bonus are, therefore, confirmed." 7. Vide order dated 29.10.2009 (copy placed on record), the ITAT partly allowed the assessee's appeals, observing as under: - 8. "Coming to the merits of the case, the disallowance in both the years pertaining to conveyance allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is in the aforesaid terms of the Tribunal order dated 13.05.2011 that these appeals are once again before us. 10. The ld. Counsel for the assessee has contended that the claim of incentive bonus has wrongly been disallowed by the Tribunal vide its order dated 29.10.2009 ( supra ); that in its order dated 17.02.2006 ( supra ), the Tribunal had clearly held such incentive bonus to be allowable; that such incentive bonus was reimbursed by the LIC to the assessee; that form no. 16 had been duly issued in this regard; that the said form no. 16 had not been found by the Tribunal in its order dated 17.02.2006 ( supra ), to be sufficient; that it was therefore, that the assessee had been directed to obtain necessary certificates in this regard from the LIC and the CIT(A) was directed to afford adequate opportunity to the assessee to prove its claim; that the requisites (copy placed on record) had been duly issued to the assessee by LIC; that therein, LIC had certified that payment of, inter alia , incentive bonus of Rs. 70,276/- had been made to the assessee Development Officer during F.Y. 1996-97, relevant to A.Y. 1997-98 and that the payment had been shown as non-taxable part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentions "certificate of LIC enclosed confirming reimbursement of expenses". The Tribunal order dated 29.10.2009 ( supra ) was, however, passed on hearing the arguments of both the parties. The order records the department as having been duly represented. Therein, the department was not observed to have raised any dispute that these certificates were not filed before the CIT(A) in pursuance of the Tribunal order dated 17.02.2006 ( supra ). No such dispute was also raised by the department, either in their MA No. 218/Del/2010 ( supra ), filed subsequent to the passing of the Tribunal order dated 29.10.2009 ( supra ), or in any other application. Therefore, it remains un-controverted that the said certificates were filed before the CIT(A) pursuant to the Tribunal order dated 17.02.2006 ( supra ). The fact is that the CIT(A) did not consider these certificates while passing the impugned order. 15. Since the Tribunal, in its order dated 29.10.2009 ( supra ), while considering these certificates, held that incentive bonus for A.Y. 1997-98 was to be treated as salary income, in spite of having held them to be covered by sec. 10(14) of the Act, as the certificates were given by LIC to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate issued by LIC in Form No. 16 was conclusive for exemption u/s 10(14). For that purpose, he also place reliance on Instruction No. 1738 dated 28.11.1986 and letter dated 12.03.1997 issued by CBDT. Reference was also made to ITAT SMC Branch order in the case of Mr. Acharya. 4. On careful consideration of various contentions of the assessee, we find that there is sea change in the provisions of sec. 10(14) introduced by the Finance Act, 1995 with effect from 01.07.1995. Therefore, from 01.07.1995 in order to be treated as exempt u/s 10(14), the reimbursement of any expenditure incurred by the employee must be one that has been prescribed under Rule 2BB of I.T. Rules, 1962. Secondly, as far as CBDT letter dated 12.03.1997 is concerned, From No. 16 does not fulfil the requirements and there has to be a certificate from LIC that the payment has been made against the expenses incurred by the Development Officer by way of reimbursement of expenses. Under these circumstances, we are of the view that it would do in fitness of things if both these appeals are restored to the file of the ld. CIT(A) for decision afresh in the light of sec. 10(14) and CBDT letter dated 12.03.1997 addressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in educational and research institutions; ( f ) any allowance granted to meet the expenditure incurred on the purchase or maintenance of uniform for wear during the performance of the duties of an office or employment of profit." 22. The Rule, thus, clearly lays down the prescribed allowances. It is seen that incentive bonus does not come under any of the allowances prescribed by the Rule. Even in the Tribunal order dated 17.02.2006, it has been observed, inter alia, that " ..from 01.07.1995 in order to be treated as exempt u/s 10(14), the reimbursement of any expenditure incurred by the employee must be one that has been prescribed under Rule 2BB of I.T. Rules, 1962. 23. However, vide order dated 12.03.1997 ( supra ), addressed to the Chairman, LIC, the CBDT stated as follows: "Your circular No. MKTG (2D)/4/97 dated 18.02.1997 enclosed with your letter has been examined but the advice contained therein does not appear to be in accordance with the provisions of the Income tax Act. Unless an allowance is notified u/s 10(14)(i), no portion of it can qualify for tax exemption. On the other hand, the Ministry of Law have advised that it is not possible to notify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CBDT letter dated 12.03.1997 ( supra ), addressed to the Chairman, LIC. It certifies reimbursement of incentive bonus of Rs. 70,276/- to the assessee against expenses incurred by the assessee in performance of duties of office of employment. It states that the payment was shown as non-taxable part of income in the salary certificate (Form No. 16), since the payment was made against expenses incurred by the Development Officer in performance of duties of office of employment. 28. Now, since as per the certificate, it is reimbursement of expenses incurred by the Development Officer in performance of duties of office of employment, which has been made to the assessee, such reimbursement of incentive bonus falls squarely within the requirements of the CBDT letter dated 12.03.1997 ( supra ). It may be emphasized here that though, as observed hereinabove, the pre-requisite is the prescription of the expenditure under Rule 2BB of the Rules, as per the aforesaid CBDT letter dated 12.03.1997, the Ministry of Law has advised that it is not possible to notify "incentive bonus" u/s 10(14)(i). It is therefore, that the contents of the said letter are to be taken as they are for the purpo ..... 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