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TMI Blog2022 (10) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... which the authorities have proceeded is unfounded as it is the employer who makes the payment to its employee as per the rules or the procedure regulated by it - Decided in favour of the assessee. Disallowance of expenses incurred for Running Maintaining Premium Collection Centre - HELD THAT:- LIC Business is unique business and where the assessee incurs expenses on maintenance of collection centre and these expenses are not income of the assessee. As per the nature of business, the assessee has to incur expenses on collection centers - As relying on Nitibhai Bhuptani [ 2018 (4) TMI 1610 - ITAT RAJKOT] issue decided in favour of assessee. - ITA No.166/SRT/2017 - - - Dated:- 6-10-2022 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rasesh Shah, CA For the Respondent : Shri Vinod Kumar, Sr. DR ORDER PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to the Assessment Year (AY) 2013-14, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), Valsad [in short the ld. CIT(A) ] in Appeal No. CIT(A)/VLS/193/16-17/529, dated 07.06.2017 which in turn arises out of an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er will form part of perquisite within meaning of sec. 17(2) of IT Act. 8. The above Grounds of Appeal are without prejudice to and are independent of each other. 9. Your Appellant craves, leave to amend, alter, delete and /or add to or withdraw the foregoing Grounds of Appeal any time before the appeal is decided. 3. Ground nos. 1 and 2 raised by the assessee, relate to disallowance of claim by Assessing Officer of Rs.8,34,845/- being 30% of income of incentive bonus commission of Rs.27,82,817/-. 4. Brief facts qua the issue are that during the assessment proceedings, Assessing Officer observed from the Salary Certificate (Form 16) issued by the employer, that entire sum of Rs.47,63,813/- has been treated as the Salary of the assessee, including the sum of Rs.8,34,845/- being claimed by the assessee as incentive Bonus. It has been treated as a part and parcel of assessee s salary and accordingly TDS has also been made on the entire amount including the amount claimed as incentive Bonus. The Assessing Officer noted from the computation of income that assessee has based his deduction not on any statutory provision but on the decision of Hon'ble High Court of Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to 01.04.1989 for the purpose of income-tax is the question to be considered in this case. 8. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 9. We have heard both the parties and noted that issue under consideration is squarely covered by the judgment of Lucknow Co-ordinate Bench of ITAT, in ITA No.902/LKW/2014 in the case of Rajendra Mani Yadav vs DCIT, wherein it was held as follows: 6. We have considered the rival submissions. We find that the second issue is partly covered in favour of the assessee by this judgment of Hon ble Apex Court rendered in the case of T. K. Ginarajan vs. CIT (Supra). It was held in this case that with effect from 01.04.1989, the LIC itself issued a clarification to the effect that the D.O. would be entitled to claim reimbursement to the extent of 30 % of the incentive bonus granted to them and thus, the dispute is confined only to the period prior to 01.04.1989 and after 01.04.1989, only balance of incentive bonus after excluding 30% of incentive bonus will be treated as sala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee relate to disallowance of Rs.6,95,704/- being claimed under section 10(14) of the Act for conveyance allowance. 12. Brief facts qua the issue are that Assessing Officer noted, during scrutiny proceedings, that the second allowance claimed by the assessee against Salary income is Conveyance Allowance of Rs.6,95,704/-. Since, neither such an allowance has been provided by the statute nor had the assessee provided any legal/judicial basis for it, therefore Assessing Officer was of the view that the claim of deduction is patently unacceptable and is accordingly rejected and added back to the total income of the assessee. 13. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the action of the Assessing Officer. 14. Aggrieved by the order of ld. CIT(A), the assessee is in further appeal before us. 15. The Ld. Counsel for the assessee argued that assessee is entitled to claim conveyance expenses as per the provision of section 10(14) of the Act, and for that he relied on the judgment of Hon'ble Karnataka High Court in the case of Sumphony Marketing Solutions India (P) Ltd. (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation circular dated August, 3, 1987, referred to in the preceding para. It appears that the Life Insurance Corporation has, worked out the additional conveyance allowance to the Development Officers considering the probable expenditure for procuring the business. The Life Insurance Corporation appears to have devised the general formula having a reference to the parameters of the business and, thus the payment of additional conveyance allowance is a reimbursement for actual expenditure incurred by the Development Officers on account of conveyance in relation to performance of their duties and the said expenditure has a direct nexus with the performance of duties for development of the insurance business by way of meeting several people and to enrol new life insurance agents and to meet the insurance persons for encouraging them to take insurance policies. Naturally, in such circumstances, touring expenses are incurred on conveyance. Such conveyance expenses are reimbursed by the employer as per the prescribed norms in the name of additional conveyance allowance. The certificate is given by the LIC employer of the minimum amount which the Life Insurance Corporation certifies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the LIC that conveyance allowance is not reimbursed for expenditure incurred on conveyance in performance of duties of office and the said allowance was paid to all employee whethere as on duty or not irrespective of place of residence. The following is the reason and finding in the said judgment while rejecting the claim of the Life Insurance Corpn.Class I Officers (Bombay) Association (supra). It is useful to quote the conclusions of the judgment which are in following words:- .... In the instant case, the affidavit filed on behalf of the respondent No. 1 clearly demonstrates that the conveyance allowance in terms of rule 9(b) of the Rules is not reimbursement for expenditure incurred on conveyance in performance of duties of office. It is an allowance paid to all employees whether on duty or not irrespective of his place of residence and the place of his work and also irrespective of whether he is posted in any of the 2,000 offices of respondent No. 1. Clearly, therefore, there is no doubt whatsoever that the said allowance would not be exempt under section 19(14) of the Income Tax Act, 1961, read with Rule 2BB(1)(c) of the Income-tax Rules, 1962. 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that We approve the reasoning of the Tribunal. In our view where amounts are paid to the employees by an employer to meet expenses wholly, necessarily and exclusively for the performance of the duties, such amounts can be exempted to the extent it is shown that it has been incurred for the purpose for which it was granted. In the case of employees of the State or Corporations, whether statutory or otherwise, where the employer after having surveyed the actual expenditure necessary for performance of the duty, grants actual allowance generally to all the employees, it is to be presumed that the entire expenditure has been incurred for the purpose for which it has been granted, for if it not incurred for which is has been given, it would entail disciplinary action against the employee. Unless such a case has been initiated against an employee by an employer, the said presumption that the employee has incurred the expenditure for which it is granted, will apply and it will not be necessary for the employees to submit accounts every month to the employer and along with return to the assessing authority. If, in such matters, filing of the accounts and vouchers/receipts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the duties, such amounts can be exempted to the extent it is shown that it has been incurred for the purpose for which it was granted. In the case of employees of the State or Corporations, whether statutory or otherwise, where the employer after having surveyed the actual expenditure necessary for performance of the duty, grants actual allowance generally to all the employees, it is to be presumed that the entire expenditure has been incurred for the purpose for which it has been granted, for if it not incurred for which is has been given, it would entail disciplinary action against the employee. Unless such a case has been initiated against an employee by an employer, the said presumption that the employee has incurred the expenditure for which it is granted, will apply and it will not be necessary for the employees to submit accounts every month to the employer and along with return to the assessing authority. If, in such matters, filing of the accounts and vouchers/receipts are insisted upon to claim exemption under section 10(14) of the Act by the Income-tax authorities, it will lead to voidable waste of time and expenditure and would serve no useful purpose but on the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case, I do not find any merit in claim of the assessee. As regards the additional work the assessee has already been allowed expenses of Rs.181226/- in Ground of Appeal 3. No expenses other than above stated reimbursements are allowable to assessee as he is earning income from salary and these are stately business expenses against which no such business income has been shown. Accordingly the business expense of Rs.266596/- are disallowed, which results into enhancement of Rs.266596/- Rs.98985/-= Rs.167611/-. 20. It is a consequential issue, whether assessee is entitle to any expenditure under the head business expenses, it is observed that while dealing with the issue in A.Y. 2010-11 we have held that assessee was not doing any business. He is entitled to the expenses which were reimbursed by the LIC for performing the duty as a Senior Business Associate. The assessee separately cannot claim any expenditure under the head business expenditure. In A.Y. 2011-12 2012- 13, the assessee has not given us the breakup of the expenditure additionally given by LIC to him for earning additional incentive or performing duty as a senior business associate. The scheme considered by us i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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