The Aforesaid Issues Are No More Debatable In View Of The Judgment v. T.k. Ginarajan, Development Officer, Lic Of India , (2002) 253 Itr 463. In

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.T.SANKARAN THURSDAY, THE 12TH JULY 2007 / 21ST ASHADHA 1929 ITA.No. 72 of 2002 -------------------- M.P.NO.12/COCH/2001 ARISING OUT OF ITA.NO.519/COCH/94 DATED 23.8.2001 OF THE INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: ------------------------------------ THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.P.K.R.MENON(SR.),SC FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENT/RESPONDENT: ------------------------------------------- SHRI M.M.JOSEPH, DEVELOPMENT OFFICER, LIFE INSURANCE CORPORATION OF INDIA, COCHIN. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 12/07/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & K.T.SANKARAN, J. ------------------------------------------ I.T.A.No.72 of 2002 ------------------------------------------ Dated, this the 12[th] day of July, 2007 JUDGMENT H.L.Dattu, C.J. This appeal arises out of an order passed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A.No.519 of 1994 dated 23[rd] August, 2001. 2. The revenue has raised the following questions of law for consideration and decision of this Court: “1. Whether, on the facts and in the circumstances ofthe case and also in the light of the decision of the SupremeCourt in 243 ITR 143, the Tribunal is right in law inallowing any deduction separately from incentive bonus? 2. Whether, on the facts and in the circumstances ofthe case, the Tribunal is right in law in holding: i. 30% of the incentive bonus is to be excludedfrom the definition of “emoluments under section 17” ii. 30% of the incentive bonus should beexcluded from the computation at the inception itself? 3. Whether, on the facts and in the circumstances ofthe case (and the incentive bonus being salary), the assesseeis entitled to any deduction excess/different from standarddeduction allowable/permissible under section 16(1) of theIncometax Act?” 3. The aforesaid issues are no more debatable in view of the judgment pronounced by this Court in the case of Commissioner of Income Tax v. T.K. Ginarajan, Development Officer, LIC of India, (2002) 253 ITR 463. In the said decision this Court has observed as under: “Whether any expenditure is allowable in the computationof income or any receipt has to be added to income only afterproviding for the expenditure is a matter to be found in thestatute, that is, the Income-tax Act. The scheme of the Act iscompartmentalisation of income under various heads and computation of the taxable portion strictly in accordance with theformula of deductions, rebates and allowances provided therein.The first step in this regard is to identify the head under whichthe income is assessable. Deductions and allowances arespecific for each head of income. The definition of “salary”under section 15 of the Income-tax Act, 1961, is so wide and isonly an inclusive one taking in all receipts from the employer inthe form of wages, commission, bonus, profits in lieu of or inaddition to salary, etc. Therefore, any payment by the employerto the employee towards consideration for services rendered inthe course of employment comes within the description of“salary” which includes perquisites as well. computation of the taxable portion strictly in accordance with theformula of deductions, rebates and allowances provided therein.The first step in this regard is to identify the head under whichthe income is assessable. Deductions and allowances arespecific for each head of income. The definition of “salary”under section 15 of the Income-tax Act, 1961, is so wide and isonly an inclusive one taking in all receipts from the employer inthe form of wages, commission, bonus, profits in lieu of or inaddition to salary, etc. Therefore, any payment by the employerto the employee towards consideration for services rendered inthe course of employment comes within the description of“salary” which includes perquisites as well. The incentive bonus is a percentage of the premiumreceived by the LIC of India for the business canvassed throughthe Development Officers. It is not the reimbursement of anyexpenditure and is not even linked to expenditure, if any,incurred by the Development Officers. Further, in cases wherethe remuneration otherwise receivable by the DevelopmentOfficers is in excess of 20 per cent of the net premium, then theDevelopment Officer is not entitled to any incentive bonus. It isan additional payment and is nothing but a salary coming withinthe meaning of section 15 of the Act and the DevelopmentOfficers are not entitled to any deduction over and above thestandard deduction.” 4. Following the observations made in the aforesaid decision the questions of law raised by the revenue are answered in the negative and infavour of the revenue and against the assessee. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE vns (K.T.SANKARAN)JUDGE