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TMI Blog1992 (6) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Officer is a regular employee of the LIC and in that capacity gets certain fixed salary and perquisites, yet his efforts to bring extra business are compensated by LIC by giving him incentive new business bonus which is worked out on certain prescribed criteria. According to the LIC Development Officer's order, 1978, the incentive bonus is not considered to be part of annual remuneration as will be clear from the following extracts: "Annual remuneration"- means the basic pay, special pay, personal pay, dearness allowance, and all other allowances and non-profit sharing or ex gratia bonus due or paid to Development Officer during the appraisal year and includes the expenses payable or reimbursed to him or incurred by the Corporation du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent decision of Andhra Pradesh High Court in K.A. Choudary vs. CIT (1990) 183 ITR 29 (AP). 6. We have considered the rival submissions and facts on record. We find that incentive bonus is not akin to the ordinary bonus given under the Payment of Bonus Act. It is an additional amount which is given to the assessee on the basis of the additional field work which results in bringing of additional premium to LIC from new customers. The definition of the term 'salary' in s. 17 is very wide and that definition includes profits in lieu of and addition to salary. Consequently, the question to be considered is under what head the incentive bonus would be assessable. The answer would be that it would be assessable under the head salaries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed that incentive bonus represented income from profession and did not represent salary income and as such said income was assessable under the head income from business or profession and for that reason expenses incurred were allowable as deduction. The High Court considered the narrow question whether the said amount was assessable as income from salary or income from business or profession. The High Court held that the said amount was assessable as income from salary and not as income from business or profession. On the basis of this finding the conclusion was that expenses which were claimed as business or professional expenses were not allowable as deduction. The High Court did not consider the question whether the expenses incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration the fact that several facilities are allowed by the LIC, deduction in excess of 40% should not be allowed. In fact the allowance of deduction at 40% should not be regarded as invariable. In a given case, the ITO would be entitled to bring on record material which would indicate that the development officer would not have incurred 40% expenditure to earn incentive bonus. If such material is brought on record then expenditure at less than 40% would be allowable. Everything would depend upon what material the ITO brings on record. In the present case, the learned Comissioner was not justified in directing the ITO to withdraw the entire deductions allowed for earning the incentive bonus. On facts of the present case, when we are deal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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