Rc/110/2000 Of Commissioner Of Income Tax.a.p. Hyd v. G.venkatram Reddy

THE HON’BLE SRI JUSTICE V.V.S.RAOAND THE HON’BLE SRI JUSTICE B.N.RAO NALLA REFERRED CASE No.110 of 2000(On being mentioned) ORDER:(Per Hon’ble Sri Justice V.V.S.Rao) In our order dated 30.11.2011 the question referred to thisCourt was inadvertently answered “in the negative in favour of theRevenue and against the assessee”. Subsequently, when wewere dealing with the other connected matters we noticed that inthis case when the assessee (an LIC Officer) claimed 40%deduction of the incentive bonus paid by the employer, whileprocessing the return under Section 143(1)(a) of the Income TaxAct, 1961 (the Act), the same was disallowed. As held by the Supreme Court in Kvaverner John BrownEngg. (India) P.Ltd v Assistant Commissioner of IncomeTax[[1]],at the time of processing the return under Section 143(1)(a) of the Act, except adjusting the arithmetical/clerical errors, theAssessing Officer cannot make adjustments, especially, when theissues are debatable. In this case as found by the Tribunal when the adjustmentswere made, the issue whether incentive bonus can be claimed asa deduction was debatable, and the case of this Court inCommissioner of Income Tax v B. Chinnaiah[[2]]camesubsequently. In view of this, the Senior Counsel for Income Taxfairly accepts that the mistake has crept in the order. Therefore, while directing that this order shall form part ofthe order dated 30.11.2011, we further direct that the penultimateparagraph in the earlier order shall be deleted and the following paragraph shall be substituted. “The Referred Case is answered in the affirmative in favourof the assessee and against the Revenue holding that theadjustments including disallowance bonus while processingreturns under Section 143(1) of the Act are not permissible underlaw”. _______________ (V.V.S.RAO, J) 26.12.2011vs ____________________ (B.N.RAO NALLA, J) [1](2008) 305 ITR 103 (SC) [2](1995) 214 ITR 368