- (1.)ON an application filed under Section 256(1), the Tribunal has referred the following question for our opinion :
"Whether, on the facts and circumstances of the case, the Tribunal was right in upholding the order of the learned Deputy Commissioner (Appeals) on the ground that the issue before him was debatable and hence could not be considered as a mistake apparent on the record rectifiable under Section 154, despite the fact that when the Tribunal decided the appeal, the issue was no longer debatable as far as the State of Rajasthan was concerned, in view of the decision of the Rajasthan High Court in the case of CIT v. Shiv Raj Bhatia [1997] 227 ITR 7 (D. B. I. T. Reference No. 8 of 1992 dated May 1, 1996) ?"

(2.)THE assessee is a Development Officer of the Life Insurance Corporation. In the year under consideration, the assessee claimed deduction of 50 per cent, on account of expenditure out of the incentive bonus earned by him. THE return was processed under Section 143(1)(a) without any adjustment being made to the returned income. THE Assessing Officer, however, subsequently withdrew the claim of the assessee by passing an order under Section 154. THE assessee preferred an appeal before the Deputy Commissioner (Appeals). THE Deputy Commissioner (Appeals) quashed the order of the Assessing Officer under Section 154 of the Income-tax Act, 1961, on the ground that whether the assessee is entitled for deduction of any expenditure out of the incentive bonus, is a debatable issue, therefore, the Income-tax Officer, cannot withdraw the expenditure on incentive bonus in an order under Section 154 of the Act. THE view taken by the Deputy Commissioner (Appeals) has been affirmed by the Tribunal vide order dated March 4, 1997.
None appeared for the assessee. Heard Mr. Singhi, learned counsel for the Revenue. Learned counsel for the Revenue, Mr. Singhi, submits that the issue involved in this case has been considered by this court in the case of C/T v. Shiv Raj Bhatia [1997] 227 ITR 1, vide order dated May 1, 1996, holding that when the assessee is an employee of the Life Insurance Corporation and received any incentive bonus, no deduction can be allowed out of that incentive bonus in the name of expenditure.

Mr. Singhi further submits that when there is a decision of the High Court on the date of the order of the Tribunal, the Tribunal cannot say that the issue is debatable and the Tribunal is bound to follow the view taken by the jurisdictional High Court.

The facts are not in dispute that the assessee has claimed the deduction out of the incentive bonus, that has not been disallowed by the Income-tax Officer till intimation sent under Section 143(1)(a), subsequently in an order under Section 154 that incentive bonus has been withdrawn.

Though there was no decision of the High Court on the date of the order of the Assessing Officer, but on the date of the order of the Tribunal, i.e., March 4, 1997, the decision of the jurisdictional High Court in the case of CIT v. Shiv Raj Bhatia [1997] 227 ITR 7 (Raj) was available. We agree with Mr. Singhi that on that date, the Tribunal cannot say that the issue is debatable so far Rajasthan State is concerned. When the issue is not debatable, the Tribunal has committed error in holding that the issue is debatable in spite of the decision of the jurisdictional High Court in Shiv Raj Bhatia's case [1997] 227 ITR 7 (Raj), which is binding on the income-tax authorities including the Tribunal.

(3.)IN the result, we answer the question in the negative, i.e., in favour of the Revenue and against the assessee.
Reference so made stands disposed of accordingly.