Kerala High Court
Commissioner Of Income-Tax vs V. Sudhakaran Nair on 11 November, 1998
Equivalent citations: [1999]240ITR687(KER)
Author: J.B. Koshy
Bench: J.B. Koshy
JUDGMENT Om Prakash, C.J.
1. As directed by this court under Section 256(2) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal referred the following question, relating to the consecutive assessment years 1982-83 to 1984-85 for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the assessee is entitled to deduction up to 40 per cent, of the incentive bonus received by him from the Life Insurance Corporation of India ? "
2. The Appellate Tribunal held as under :
"4. We have considered rival submissions. An identical question came up for consideration of this Bench in I.TA Nos. 79 and 80 (Coch.) of 1983 and 92 and 93 (Coch.) of 1983 relating to the assessment years 1979-80 and 1980-81 in the case of Sri K.I. Kuriakose, C/o. LIC of India, Ernakulam, and the Tribunal by its consolidated order dated September 27, 1990, on similar facts and circumstances, came to the following conclusion in para. 12 of its order :
'Thus, on a consideration of all the facts placed before us and in conformity with the Special Bench decision on an identical issue, we hold that the incentive bonus is a kind of special allowance granted to the Development Officer by the Life Insurance Corporation of India to meet certain targets in terms of securing business, recruiting agents, training such agents and generally organising the business of the corporation. In earning this special allowance, certain expenses are incurred and to the extent to which such expenses are actually incurred by the assessee would be entitled to deduction. In the absence of verifiable vouchers, some estimate of expenditure for deduction has to be made and such expenditure may be up to 40 per cent, of the incentive bonus depending upon the facts and circumstances of each case such as the business secured, the number of agents, the amounts of premium collected, number of policies, the amount of revival of lapsed policies and any other relevant factor. In the case before us we do not have enough material to quantify the amount of deduction in the light of the Special Bench decision cited supra. The impugned order of the Tribunal dated February 8, 1985, is, therefore, recalled and the matter is restored to the file of the Income-tax Officer with a direction to quantify the deduction for expenditure incurred in earning the incentive bonus in the light of our observations.' The facts and circumstances remain the same in the case of the asses-see before us also. We, therefore, set aside the order of the Appellate Assistant Commissioner in this regard and remit the matter back to the Income-tax Officer with a direction to allow deduction of expenditure up to 40 per cent, of the bonus or the actual expenditure incurred by the assessee, whichever is less, in earning the incentive bonus."
3. The Tribunal's order relating to the assessment years 1979-80 and 1980-81, which formed the basis of the decision of the Tribunal, relating to the consecutive assessment years 1982-83 to 1984-85, was set aside and the case was remanded back to the Tribunal by a judgment of this court, reported in CIT v. Varghese Mathew [1991] 190 ITR 556.
4. Following the case of Varghese Matkew [1991] 190 ITR 356 (Ker), we return the question unanswered and remand the case to the Tribunal to decide the appeals afresh.