B.R.ARORA, J. - (1.) THE Tribunal, Jaipur Bench, Jaipur, for the asst. yr. 1985-86, in the case of the assessee, by its order dt. 28th Dec., 1989, referred the following question of law, under S. 256(1) of the IT Act, 1961, for the opinion of this Court : "Whether, on the facts and in the circumstances of the case, the learned Members of the Tribunal were justified in directing the ITO to allow 50% deduction of incentive bonus received by the assessee from LIC of India relying on Board's Circular No. 14\9\65-IT(A.I) dt. 22nd Sept., 1965 which in fact is applicable to LIC agents and not for Development Officer ?"
(2.) THE assessee was working as the Development Officer with the LIC of India and was posted at Pali. The assessee, during the asst. yr. 1985-86, received an amount of Rs. 55,160 as the incentive bonus from the LIC of India. He claimed a deduction on this amount. The ITO Pali, by its order dt. 28th Feb., 1986, disallowed the deduction on the amount of incentive bonus by holding that the incentive bonus is simply an extra remuneration received by the employee for which he had not to spend any amount. The definition of the term 'salary' clearly includes such remuneration and extra remuneration in its fold and hence it is clearly taxable. Dissatisfied with the order dt. 28th Feb., 1986 passed by the ITO, disallowing the deduction on the amount of the incentive bonus, the assessee preferred an appeal before the AAC, Jodhpur. The appeal filed by the assessee relating to the deduction on the amount of Rs. 50,160 received by him by way of incentive bonus, was partly allowed by the AAC. The AAC allowed 20 per cent deduction on the amount of incentive bonus of Rs. 50,160 and dismissed the appeal so far as the remaining relief is concerned. Aggrieved with the order dt. 27th May, 1987 passed by the AAC, the assessee preferred an appeal before the Tribunal, Jaipur Bench, Jaipur. The Tribunal, by its order dt. 21st Dec., 1988, relying upon the Circular of the Board regarding allowance of 50 per cent of the deduction in the case of LIC agents and on the basis of its own decision, allowed 50 per cent deduction on the incentive bonus. While allowing 50% deduction of incentive bonus, the Tribunal directed the ITO to allow 50 per cent deduction to the assessee on the amount of incentive bonus received by him from the LIC of India. Aggrieved with the order passed by the Tribunal, the Revenue moved an application under S. 256(1) of the Act for referring the questions of law mentioned in the application for the opinion of the High Court and the Tribunal, vide its order dt. 28th Dec., 1989 referred the above noted question for the opinion of this Court.
(3.) THE Tribunal allowed the deduction @ 50 per cent on the amount of incentive bonus relying upon the Board's Circular.;