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TMI Blog1982 (2) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the advocate. We have very carefully looked into the circumstances and condone the delay in filing the cross-objections. In our opinion, the delay was due to a reasonable cause. 3. In order to appreciate the respective grievances of the parties before us in appeal and cross-objections, it is necessary to record the facts which are necessary to determine the issues involved and from which, in fact, the issue emanate. 4. Shri Raj Kumar Sethi is an employee of the LIC of India. During the accounting period relevant to the assessment years under appeal, he was employed as development officer of Life Insurance Corporation of India, Ludhiana. According to the managing director of the LIC, Central Office, Yogakshema, Jeevan Bima Marg, Bombay 20, the norms of working of development officer, as also explained by the Morarka Committee, essentially are that they are field workers. They have to contact agents as well as prospective policy holders in the field. The remuneration and prospects of development officers, therefore, are related to the results of the efforts they put in (page 5 of the paper book). Though the development officers are regular employees of the LIC, yet it is rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "the assessee is first and foremost a salaried person and all the relevant perks attached to his post are provided by virtue of his employment". The assessee has pointed out to the ITO that he had expended money for securing record business of Rs. 74,17,000 on 513 lives during the year ending 31-3-1976 and had maintained, inter alia, an employee for earning the incentive bonus, etc. The ITO, however, rejected the entire claim on the ground that he was not supposed to keep any employee for earning salary/allowance. 8. For the assessment year 1978-79, the above decision arrived at by the ITO was applied and the claim of the assessee for deduction of 40 per cent expenses against the incentive bonus was rejected. When these assessments were taken up in appeal, the AAC accepted in part the claim of the assessee and allowed expenses of 20 per cent of the gross incentive bonus during the accounting period relevant to each of the assessment year under appeal. While allowing this quantum of expenses, he gave a finding as under : "5. I have considered the submissions made on behalf of the appellant. I have also perused the relevant assessment orders. I am inclined to agree with the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred. The order of the AAC is, therefore, erroneous and may be set aside and that of the ITO for each of the assessment years restored. 10. Opposing these submissions, the learned counsel for the assessee submitted that no doubt the assessee holding the rank of development officer of LIC is an employee of the Corporation, yet all the payments that he receives from the Corporation cannot be termed as salary because his salary is minimum fixed and thereafter certain payments like the incentive bonus are entirely, depending upon the personal efforts, made in the field to secure additional insurance business for his employer. The incentive bonus, therefore, cannot form part of the salary and, therefore, the deductions statutorily provided under section 16 are not the only deductions to which the assessee is entitled to adjust his income. It was submitted that the judgment of the Madras High Court referred to by the revenue is not applicable to the facts of the case. On the other hand, the learned counsel for the assessee submitted that the judgment of the Appellate Tribunal in the case of ITO v. Dr. C. Parkash 1977 Tax. 49 (VI)-1 (Chd.) is relevant for consideration and application t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 17(1) which is as under : "(1) 'salary' includes--- (i) wages ; (ii) any annuity or pension; (iii) any gratuity ; (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages: (v) any advance of salary ; (vi) the annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule ; and (vii) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof." A careful perusal of the definition of salary given in section 17(1) shows that the Legislature has carefully avoided the use of the word bonus in it. This appears to be quite in accordance with the scheme of the Act because there is a special provision relating to the deduction of bonus while computing the total income of an assessee in accordance with the provisions of the Act. Section 36(1)(ii) of the Act provides that any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as the leader of Chandigarh Division. This is recognition of the efforts put in beyond the call of duty to earn as a recompense for such efforts. In fact the assessee acts in a duel capacity. He is an employee of the Corporation for earning the basic salary which he has himself shown as salary income but for earning the incentive bonus, which is neither covered by the Payment of Bonus Act nor otherwise a part of salary as per conditions of employment, he has to put in efforts in propagating the virtues of insuring lives and securing business which forms the base for earning the incentive bonus. He is thus an agent of the corporation insofar as this sector of his activity is concerned and the incentive bonus is income from profession. 14. The incentive bonus was received by him on the premium paid in the primary business obtained during the accounting period relevant to each of the assessment years under appeal. We were told that there are guidelines laid down by the CBDT ("Board") in a circular issued to the field officers that where insurance agents claim expenses against the income from insurance policies and they are unable to prove the expenses for lack of record, 40 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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