TMI Blog2013 (8) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court of Gujarat failed to take note of the reply by the CBDT that it was for the LIC of India to reimburse the actual expenditure involved in the performance of the duty by the Development Officers and to that extent the same was not to be shown as salary. Compartmentalization of income under various heads and computation of the taxable portion strictly in accordance with the formula of deductions, rebates and allowances are to be done only as per the scheme provided under the Act - The appellant being a salaried person, the incentive bonus received by him prior to 01.04.1989 has to be treated as salary and he is entitled only for the permissible deductions under Section 16 of the Act. The expenses incurred in the performance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed part of their income towards salary. To quote: "... Such 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 Officer by way of reimbursement of expenses. In that case, such reimbursement will not form a part of the 'salary' of the Development Officer and only the incentive bonus will appear in their salary certificates. LIC has not certified that a part of the incentive bonus is against the expenses incurred by the Development Officers by way of reimbursement of expenses. If such a part is certified and that part will not form part of the salary and that part of the incentive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10). In the case of salaried persons, the only permissible deduction is under Section 16 of the Act. Section 17 has clearly provided for the details of income by way of salary. There is no serious dispute in this case that the incentive bonus paid to the employee by the employer is nothing but salary and there cannot be any dispute either since such payments are covered by the exhaustive definition of 'salary' under Section 17(1). For the purpose of ready reference, we shall extract the same: ""Salary", "perquisite" and "profits in lieu of salary" defined. 17. For the purposes of sections 15 and 16 and of this section,- (1) "salary" includes - (i) wages; (ii) any annuity or pension; (iii) any gratuity ; (iv) any fees, commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... othing but salary and no deduction over and above the standard deduction provided under Section 16 is permissible under the Act. Accordingly, the claim of expenditure or net income theory put forward by the Development Officers was rejected by the High Court of Karnataka. Similar is the view taken by the High Court of Andhra Pradesh in K. A. Choudary vs. Commissioner of Income-Tax and Others[(1990) 183 ITR 29 (Andhra Pradesh)], the Madras High Court in Commissioner of Income-Tax vs. E. A. Rajendran[(1999) 235 ITR 514 (Madras)] and in Commissioner of Income-Tax vs. P. Arangasamy and Others[(2000) 242 ITR 563 (Madras)], the Orissa High Court in the decision in Commissioner of Income-Tax vs. Sri Anil Singh[(1995) 215 ITR 224 (Orissa)], the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10(14) as it stood prior to 01.04.1989 is the expenses incurred in the performance of the duty. It is for the employer to certify the actual expenses incurred in the performance of duty and in which case, as clarified by the CBDT, to that extent, the same shall not be shown as part of salary. On facts, as clearly noted in the Judgment of the High Court of Kerala, there is no claim by the employee either for reimbursement or exclusion of the actual expenditure incurred in performance of the duty. These two distinctions unfortunately missed the notice of the High Court of Gujarat. The Court in fact was swayed by the letter written by the LIC of India to the CBDT for clarification that, to the extent of 40% of the incentive bonus could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would form part of salary as defined under the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979. This Court held, placing reliance on the definition of 'salary' in the said Act that only in case there was remuneration on a regular basis, the same was exigible to tax under the said Act. On facts, it was found that there was no regular payment of incentive bonus. That is not the factual or legal position in the case of the appellant under the Act and, therefore, the said decision is not relevant at all for the purpose of this case. 11. The appellant being a salaried person, the incentive bonus received by him prior to 01.04.1989 has to be treated as salary and he is entitled only for the permissible deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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