TMI Blog2003 (9) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... me (copy placed before us at pages 1 to 4 of the compilation), worked out as follows : " Salaries From Life Insurance Corporation of India (as per certificate attached) 11,16,871 Less : Bonus commission considered separately 7,30,635 3,86,236 Less : Exempt u/s 10( 14 ) Conveyance Allowance 2,75,508 Less : Deduction u/s 16 Standard Deduction u/s 16( i ) 15,000 Profession tax u/s 16( iii ) 820 15,820 94,908 Add : Commission Income from LIC Bonus Commission received 7,30,635 Less : Expenses incurred 2,92,254 4,38,381 Income 5,33,289." After taking into account income taxable under other heads, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts or documents is prima facie inadmissible, shall be disallowed." Revenue s claim is that the impugned adjustments are covered by clause ( c ) above, but then it is beyond dispute that only such deductions can be declined under this legal provision as are prima facie inadmissible . Therefore, a deduction being inadmissible per se is not enough but the deduction should be such as is prima facie admissible. 6. The question that arises as to what precisely is the scope of expression prima facie inadmissible and how is it distinct from a deduction being inadmissible simpliciter. 7. This question has come up before several High Courts from time to time and the school of thought emerging from their judgments is that only such items can be said to be prima facie inadmissible as are, on the basis of income-tax return and accompanying documents itself, conclusively admissible. Therefore, it is not the absence of a positive finding regarding admissibility of a claim that can be a sufficient cause of action for invoking section 143(1)( a ) but, on the contrary, a negative finding about conclusive inadmissibility is sine qua non for invoking the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 10. In the case of S.R.F. Charitable Trust v. Union of India [1992] 193 ITR 95, Their Lordships of Hon ble Delhi High Court have inter alia observed as follows : "The said clause clearly provides that the Income-tax Officer can make an adjustment to the income or loss declared in the return if, on the basis of the information available in such return, accounts or documents, the deduction allowance or relief claimed is prima facie inadmissible. The conclusion that the claim of the assessee is inadmissible must, in other words, flow from the return as filed. No power is given to the Income-tax Officer to disallow a claim for the reason that there is no proof in support of the claim made by the assessee. In a way the said clause (iii) of the proviso is analogous to section 154 of the Act. Where it is evident from the return as filed, along with the documents in support thereof, that claim of the assessee is inadmissible, only then an adjustment under the said proviso can be made. If proof in support of the claim is not furnished by an assessee, then for the lack of proof, no disallowance or an adjustment can be made. [Emphasis supplied] The only option which is open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(1)( a ) but, on the contrary a negative finding about conclusive inadmissibility is sine qua non for invoking the aforesaid section. 12. The question then arises whether the prima facie disallowances impugned before us were made after arriving at a conclusive finding that the assessee was not entitled to these deductions or were made only because, on the basis of material available to the Assessing Officer, these deductions could not be said to be conclusively admissible. In view of the discussions in the preceding paragraphs, in the former case, the impugned adjustments will be covered by the scope of section 143(1)( a ) whereas, in the later case, it would at best be a fit starting point for Assessing Officer to issue notices under section 143(2) to requisition further details. 13. As regards the first item of prima facie adjustment i.e. bonus commission of Rs. 7,30,635, against deletion of which revenue is in appeal, we have noted that the assessee s claim for deduction was only Rs. 2,92,254 whereas the adjustment is made in respect of entire receipt of Rs. 7,30,635 a part of which i.e. Rs. 4,38,381 was admittedly offered for tax by the assessee. The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the annexure to Form No. 16 i.e. salary certificate issued by the employer. 15. In our considered view, the computations given in the annexure to the salary certificate have no relevance save and except for the basis on which he has estimated his liability to deduct tax at source under section 192 of the Act. Infact, it is wholly irrelevant so far as the question of exemption under section 10( 14 ) to the employee is concerned. Section 10( 14 )( i ) of the Act is reproduced below for ready reference : "In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included (14)( i ) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause ( 2 ) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, as may be prescribed to the extent to which such expenses are actually incurred for that purpose ." [Emphasis supplied] It would thus follow that the allowances covered by section 10( 14 )( i ), which beyond dispute assessee s claim was, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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