B.R. Arora, J. - (1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, under Section 256(1) of the Income-tax Act, 1961, in the case of the assessee for the assessment year 1986-87, referred the following question of law for the opinion of this court : " Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in directing to allow 50 per cent, deduction of incentive bonus received by the assessee from the Life Insurance Corporation of India relying on Board's Circular No. 14/9/65-IT (A-I), dated September 22, 1965, which, in fact, is applicable to the Life Insurance Corporation agent and not to the Development Officer. THE cases of the Development Officer are governed by the Board's Circular F. No. 200/127/ 84-IT (A), dated September 29, 1987/ October 14, 1987 ?"
(2.) THE assessee was working as the Development Officer with the Life Insurance Corporation of India. During the previous year relevant to the assessment year 1986-87, the assessee received a sum of Rs. 68,206 as incentive bonus from the Life Insurance Corporation and he claimed 40 per cent, deduction (Rs. 27,282) on this incentive bonus. THE Income-tax Officer, Sirohi, by his order dated March 24, 1987, relying upon the judgment of the Jaipur Bench of the Tribunal in ITA No. 490/JP of 1994 (ITO v. K. M. Baheti) disallowed this claimed deduction. While disallowing the deduction, the Assessing Officer held that the incentive bonus received by the assessee is a part of the salary in the hands of the assessee and no deduction is permissible since the standard deduction under Section 16(i) of the Act has already been allowed. THE Income-tax Officer further held that the assessee is an employee of the Life Insurance Corporation of India and any receipt by the assessee from the Life Insurance Corporation of either nature will be included and taxed under the head "Income from salary" under Section 15 of the Act. The assessee, dissatisfied with the order dated March 24, 1987, passed by the Income-tax Officer disallowing the deduction, preferred an appeal before the Assistant Commissioner of Income-tax (Appeals), Udaipur. The Assistant Commissioner (Appeals), by his order dated December 29, 1988, relying upon the judgment of the Income-tax Appellate Tribunal, Chandigarh, as well as on the judgment of the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, in I. T. A. No. 334 of 1987 and 335 of 1987 in the case of Modi Lal Mohnot v. ITO, decided on November 21, 1986, allowed the appeal filed by the assessee and directed the income-tax Officer to allow deduction as claimed by the assessee. The Revenue, aggrieved by the order dated December 29, 1988, passed by the Assistant Commissioner of Income-tax (Appeals), Udaipur, preferred an appeal before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur. The appeal filed by the Revenue was heard by the Tribunal at Jodhpur and the Tribunal, by its order dated January 19, 1990, dismissed the appeal filed by the Revenue on the ground that the majority of the decisions of the Jaipur Bench of the Tribunal are in favour of the assessee and against the Revenue. Dissatisfied with the order dated January 19, 1990, passed by the Tribunal dismissing the appeal filed by the Revenue, the Revenue moved an application under Section 256(1) of the Act to the Tribunal to refer the questions of law mentioned in the application for the opinion of the High Court. The Income-tax Appellate Tribunal by its order dated April 15, 1991, referred the question, mentioned in paragraph No. 1 (at page 11 supra) above, for the opinion of this court. It is contended by learned counsel for the Revenue that the incentive bonus paid to the assessee by the Life Insurance Corporation falls within the meaning of "salary" and it would be chargeable to tax under the head "Salary" and the only deduction permissible under the law are those specified in Section 16 of the Act. In support of his contention, learned counsel for the Revenue has placed reliance over : CIt v. B. Chinnaiah [1995] 214 ItR 368 (AP), CIt v. Govind Chandra Pani [1995] 213 ItR 783 (Orissa), K. A. Choudary v. CIt [1990] 183 ItR 29 (AP), Krishna Murthy (M.) v. CIt [1985] 152. ItR 163 (AP), Gestetner Duplicators P. Ltd. v. CIt [19791 117 ItR 1 ; [1979] 54 FIR 185 (SC), CIt v. Hind Lamps Ltd. [1980] 122 ItR 451 (All) and CIt v. Shri Anil Singh [1995] 215 ItR 224 (Orissa). Learned counsel for the assessee, on the other hand, has submitted that the annual remuneration paid by the Corporation to the Development Officer, as per the Rules of service does not include incentive bonus paid to him. As per Rule 7, the annual remuneration includes the basic pay, personal pay, clearness allowance and other allowances but does not include the incentive bonus. It has further been submitted by learned counsel for the assessee that the incentive bonus is a production oriented income and becomes payable to the Development Officer on achieving the higher target. When his actual performance is beyond the normal levels of performance expected of him, he has to incur expenditure in respect of (i) entertainment to the agents and the clients, (ii) conveyance facilities to his agents, (iii) prizes declared in competition amongst his agents, (iv) office expenses such as rent, secretarial assistance, printing and stationery, postage, trunk calls and telephone charges, etc. It has further been submitted by learned counsel for the assessee that every Development Officer will not get the incentive bonus and it is payable only to those persons who are eligible under Clause (iv) of the conditions and, therefore, the payment made to the Development Officer (assessee) as incentive bonus cannot be treated as "salary". The incentive bonus is not paid as a term of contract or business but is based on the business done by the Development Officer, therefore, it is a business or professional earning and is not a result of the relationship of employer and employee. In support of his contention, learned counsel for the assessee has placed reliance over : Gestetner Duplicators P. Ltd. v. CIT [19791 117 ITR 1 (SC). Learned counsel for the assessee also submitted that the quantum of incentive bonus is decided taking into consideration certain factors, such as the number of the policies procured by the Development Officer, his agents, organisation, the nature of the territory operated by him, i.e., whether rural or urban. These factors increase the size of his expenditure and, therefore, these are the necessary expenditure which have to be incurred by the Development Officer for earning the incentive bonus and, therefore, they are allowable expenditure as has been allowed to the insurance agents, vide Board's Circular No. F. 8/2/57/IT (A.I.), dated October 18, 1968. The nature of the duties of the Development Officer and the insurance agent are the same and being a beneficial circular it should be interpreted liberally and the benefit of this circular should also be extended to the Development Officers. In support of this contention, learned counsel for the assessee has placed reliance over : Maddanappa (R. S.) v. Chandramma [1965] AIR 1965 SC 1812, Ellerman Lines Ltd. v. CIT [1971] 82 ITR 913 (SC). It has also been submitted by learned counsel for the assessee that while construing a fiscal/tax statute, one must have regard to the strict nature of the law and not merely the spirit of the statute or substance of the law. In support of his contention, learned counsel for the assessee has placed reliance over : Polestar Electronic (Pvt.) Ltd. v. Addl. CST [1978] 41 STC 409 (SC).
(3.) LEARNED counsel for the assessee has also raised three preliminary objections that (i) no question of law arises in the matter and the findings arrived at by the Tribunal are purely findings of facts and the Revenue never contested nor raised the ground as to under which head the incentive bonus can be charged to tax ; (ii) the tax effect in the present reference is below Rs. 30,000 and, therefore, as per the policy decision of the Central Board of Direct Taxes, no question of law is to be raised at the instance of the Revenue ; and (iii) the Tribunal has not given any finding : whether the income was from business or from profession. LEARNED counsel for the assessee, therefore, prayed that the reference may be returned unanswered. In support of his contention, learned counsel for the assessee has placed reliance over : CIT v. A. A. Baniyan [1992] 197 ITR 717 (Bom), CIT v. M. C. Shah [1991] 189 ITR 180 (Bom), CIT v. ITAT [1992] 196 ITR 683 (Orissa) and CIT v. Sarat Ch. Sahu [1992] 195 ITR 364 (Orissa). We have considered the submissions made by learned counsel for the parties. Before dealing with the real controversy we would first like to take up the preliminary objections raised by learned counsel for the assessee. The first preliminary objection raised by learned counsel for the assessee is that no question of law arises in the present case and the findings arrived at by the learned Members of the Tribunal are purely findings of fact and the Revenue neither contested nor raised any issue as to under which head, the incentive bonus could be charged and, therefore, the reference should be returned unanswered. The jurisdiction vested in the High Court under Section 256 of the Act is advisory jurisdiction. The object in making the reference is to get a decision from the High Court on a problematic or debatable question of law. The High Court is not expected, under Section 256 of the Act, to investigate or examine the facts of the case because it is neither a court of appeal nor a court of revision. Section 256 of the Act excludes from the jurisdiction of the High Court the question of fact and the party cannot ask for a reference on a question of fact. It is only the question of law which arises out of the order passed by the Tribunal that the reference can be made and the opinion of the High Court can be obtained on that question of law. ;