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TMI Blog2011 (12) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 and confirmation of assessment on a mere change of opinion on the facts already disclosed by appellant is bad in law. 5. That case laws cited by the appellant has been completely ignored and case laws cited by ld. AO in the asstt. order are distinguishable and confirmation of assessment order is bad in law. 6. That conveyance allowance, additional conveyance allowance and incentive bonus are allowable as per provision of I.T. Act and decided case laws and certificates issued by LIC and confirmation of part additional conveyance allowance and entire expenses on incentive bonus are bad in law. 7. That confirmation of assessment framed and order passed by the ld. CIT(A) is bad in law." 3. The only ground effectively pressed is ground no. 6, which challenges the action of the ld. CIT(A) in confirming part of the disallowance concerning additional conveyance allowance and the entire expenses on incentive bonus. No argument has been addressed with regard to any of the other grounds, which pertain to the AO's action in reopening the assessee's completed assessments. The reopening has been upheld by the Tribunal vide order dated 29.10.2009, as av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.07.1995. Therefore, from 01.07.1995 in order to be treated as exempt u/s 10(14), the reimbursement of any expenditure incurred by the employee must be one that has been prescribed under Rule 2BB of I.T. Rules, 1962. Secondly, as far as CBDT letter dated 12.03.1997 is concerned, From No. 16 does not fulfil the requirements and there has to be a certificate from LIC that the payment has been made against the expenses incurred by the Development Officer by way of reimbursement of expenses. Under these circumstances, we are of the view that it would do in fitness of things if both these appeals are restored to the file of the ld. CIT(A) for decision afresh in the light of sec. 10(14) and CBDT letter dated 12.03.1997 addressed to Chairman, LIC of India under F. No. 149/25/96-TPL. The ld. CIT(A) shall allow assessee reasonable opportunity of being heard in the matter and to furnish such certificate from LIC as the assessee may chose to furnish before the ld. CIT(A) in support of his contentions. Thereafter, the issue be decided afresh in accordance with law." 6. In the second run, vide order dated 15.07.2008 (the order under appeal hearing), the ld. CIT(A) again confirm the additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case LIC makes the payment against the expenses incurred by the Development Officer by way reimbursement will not form a part of the salary and only taxable 'incentive bonus' will appear in their salary certificates. I am, therefore, convinced that the claim of the appellant for allowing deduction of conveyance allowance, Addl. Conveyance allowance and incentive bonus has been rightly rejected by the AO. The additions made by the AO on account of conveyance allowance, Addl. Conveyance allowance and Incentive Bonus are, therefore, confirmed." 7. Vide order dated 29.10.2009 (copy placed on record), the ITAT partly allowed the assessee's appeals, observing as under: - 8. "Coming to the merits of the case, the disallowance in both the years pertaining to conveyance allowance, additional conveyance allowance and incentive bonus. After hearing both the parties and various High court judgments, we are of the view that the certificates given by LIC were given to assessee towards the expenses incurred in performance of duties of office of employment of the assessee which, in our view, is covered by Sec. 10(14). However, incentive bonus in respect of Asstt. Year 1997-98 is to be held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbursed by the LIC to the assessee; that form no. 16 had been duly issued in this regard; that the said form no. 16 had not been found by the Tribunal in its order dated 17.02.2006 (supra), to be sufficient; that it was therefore, that the assessee had been directed to obtain necessary certificates in this regard from the LIC and the CIT(A) was directed to afford adequate opportunity to the assessee to prove its claim; that the requisites (copy placed on record) had been duly issued to the assessee by LIC; that therein, LIC had certified that payment of, inter alia, incentive bonus of Rs. 70,276/- had been made to the assessee Development Officer during F.Y. 1996-97, relevant to A.Y. 1997-98 and that the payment had been shown as non-taxable part of income in the salary certificate, i.e., form no. 16, as the payment had been made against the expenses incurred by the assessee Development Officer in performance of duties of office of employment and that the amount represented reimbursement of expenses and that the ld. CIT(A), in the order under appeal, however, did not consider these certificates. 11. The ld. DR, on the other hand, has strongly relied on the impugned order. It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o raised by the department, either in their MA No. 218/Del/2010 (supra), filed subsequent to the passing of the Tribunal order dated 29.10.2009 (supra), or in any other application. Therefore, it remains un-controverted that the said certificates were filed before the CIT(A) pursuant to the Tribunal order dated 17.02.2006 (supra). The fact is that the CIT(A) did not consider these certificates while passing the impugned order. 15. Since the Tribunal, in its order dated 29.10.2009 (supra), while considering these certificates, held that incentive bonus for A.Y. 1997-98 was to be treated as salary income, in spite of having held them to be covered by sec. 10(14) of the Act, as the certificates were given by LIC towards expenses incurred in performance of the duties of the office of employment of the assessee Development Officer, the assessee filed a miscellaneous application (supra) before the Tribunal. Therein, the assessee contended that the Tribunal order dated 29.10.2009 (supra) was not in accordance with either the observations of the Tribunal in its order dated 17.02.2006 (supra), or the certificate issued by the LIC regarding reimbursement of expenses of Rs. 70,276/-, or form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to be treated as exempt u/s 10(14), the reimbursement of any expenditure incurred by the employee must be one that has been prescribed under Rule 2BB of I.T. Rules, 1962. Secondly, as far as CBDT letter dated 12.03.1997 is concerned, From No. 16 does not fulfil the requirements and there has to be a certificate from LIC that the payment has been made against the expenses incurred by the Development Officer by way of reimbursement of expenses. Under these circumstances, we are of the view that it would do in fitness of things if both these appeals are restored to the file of the ld. CIT(A) for decision afresh in the light of sec. 10(14) and CBDT letter dated 12.03.1997 addressed to Chairman, LIC of India under F. No. 149/25/96-TPL. The ld. CIT(A) shall allow assessee reasonable opportunity of being heard in the matter and to furnish such certificate from LIC as the assessee may chose to furnish before the ld. CIT(A) in support of his contentions. Thereafter, the issue be decided afresh in accordance with law." 19. A perusal of the above Tribunal order shows that therein, the Tribunal observed, inter alia, that from 01.07.1995, consequent to the amendment brought by the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat ".....from 01.07.1995 in order to be treated as exempt u/s 10(14), the reimbursement of any expenditure incurred by the employee must be one that has been prescribed under Rule 2BB of I.T. Rules, 1962. 23. However, vide order dated 12.03.1997 (supra), addressed to the Chairman, LIC, the CBDT stated as follows: "Your circular No. MKTG (2D)/4/97 dated 18.02.1997 enclosed with your letter has been examined but the advice contained therein does not appear to be in accordance with the provisions of the Income tax Act. Unless an allowance is notified u/s 10(14)(i), no portion of it can qualify for tax exemption. On the other hand, the Ministry of Law have advised that it is not possible to notify the 'incentive bonus' under the said provision. However, such promotion (sic. Portion) of the 'incentive bonus' which is actually spent by the Development Officer for duties of office can still be exempted from tax if the LIC makes the payment against the expenses incurred by the Development Officers by way of reimbursement of expenses. In that case, such reimbursement will not form a part of the 'salary' of the Development Officers and only the taxable 'incentive bonus' will appear in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Development Officer in performance of duties of office of employment, which has been made to the assessee, such reimbursement of incentive bonus falls squarely within the requirements of the CBDT letter dated 12.03.1997 (supra). It may be emphasized here that though, as observed hereinabove, the pre-requisite is the prescription of the expenditure under Rule 2BB of the Rules, as per the aforesaid CBDT letter dated 12.03.1997, the Ministry of Law has advised that it is not possible to notify "incentive bonus" u/s 10(14)(i). It is therefore, that the contents of the said letter are to be taken as they are for the purpose of allowance of incentive bonus. 29. In view of the above, the order of the ld. CIT(A) so far as regards the disallowance of incentive bonus is not sustainable and it is set aside and the assessee's claim regarding incentive bonus of Rs. 70,276/- for A.Y. 1997-98 is allowed. 30. So far as regards the claim of conveyance allowance and additional conveyance allowance, the same are also allowable in view of similar certificates issued by the LIC, as noted by the Tribunal in para 8 of the order dated 29.10.2009 (supra). 31. As stated at the beginning of this o ..... 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