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Cit Agra v. G.S. Saliya - INCOME TAX REFERENCE No. 32 of 1999 [2007] RD-AH 442 (9 January 2007)


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Court No.2

Income Tax Reference No.32 of 1999

Commissioner of Income Tax, Agra

v. Sri G.S.Saluja, Jhansi

Hon'ble R.K.Agrawal, J.

Hon'ble Vikram Nath, J.

(Delivered by R.K.Agrawal, J.)

The Income Tax Appellate Tribunal has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court:-

"Whether on the facts and in the circumstances of the case, and in view of the provisions of sec.15 and 89(1) of the Income Tax Act, the Tribunal was legally justified in holding that it would not be correct to include the entire advance of Rs.1,05,000/- and Rs.39,000/- received during the year against incentive bonus and additional conveyance allowance in one year and not in respective years to which it pertains?"

The reference relates to the Assessment Year 1989-90.

Briefly stated, the facts giving rise to the present reference are as follow:-

The assessee is a Development Officer of L.I.C. of India at Jhansi. In the salary certificate issued by the L.I.C. to the assessee, there was a note to the effect that in addition to salary and allowances recorded in the certificate, the assessee had been paid an advance of Rs.1,05,000/- during the year 1988 against incentive bonus and A.C.A. for the appraisal year 1987-88 and Rs.39,000/- in February, 1989 and March, 1989 for the appraisal period 1.11.1988 to 31.10.1989. During the course of assessment proceedings, another certificate dated 28.2.1990 from the L.I.C. was filed, which read as under:-

"This is to certify that Shri G.S.Saluja, Development Officer, Life Insurance Corporation of India of India, Jhansi, has taken an advance against Incentive Bonus and Additional Conveyance Allowance in the year 1988-89 and the same is repayable in further year. This advance is not an income. Details of income have been disclosed in the certificate are true and verified with the office record. Thus, advance of Rs.1,44,000/- should not be added in the income."

In the assessment completed vide order under Section 154/251 dated 24.8.1992, the A.O. included the amounts of Rs.1,05,000/- and Rs.39,000/- in the total income of the assessee for the year under consideration as part of the salary assessable under Section 17 of the Act. In appeal, the assessee objected to the additional of Rs.1,44,000/- but the Commissioner of Income Tax (Appeals) did not specifically touched upon this issue. In appeal before the Tribunal by the assessee, the following two grounds were taken:-

"1. The learned CIT(A) erred on facts and in law in not adjudicating the ground regarding advance of Rs.1,05,000/- incentive bonus and Rs.39,000/- additional conveyance allowance.

2.   The learned CIT(A) erred on facts and in law in not deleting the advances towards incentive bonus of Rs.1,05,000/- and Rs.39,000/- additional conveyance allowance which was in respect of A.Y.19990-91 and was duly shown in the return for that year."

Vide order dated 22.11.1995 in I.T.A.No.1915(Alld) of 1993, the Tribunal, after referring to the certificate of Life Insurance Corporation of India dated 28.2.1990, reproduced above, observed that the advance of Rs.1,44,000/- had been adjusted during the period 1987-88, 1988-89 and 1989-90 and held that in this view of the matter, it will not be legally correct to include the entire advance in one year. The A.O. was directed to ascertain from the record whether this advance had been adjusted and shown as income in the respective years. Subject to this observation, the point was allowed in favour of the assessee.

We have heard Sri A.N.Mahajan, learned Standing Counsel for the Revenue and Sri Shakeel Ahmad, learned counsel appearing for the assessee.

We find that the Tribunal relying upon the letter dated 28.2.1990 High School held that the advance of Rs.1,44,000/- has been adjusted during the periods 1987-88, 1988-89 and 1989-90 subject to the provisions of Section 89 of the Act which covers the arrears of salary as also advance to be spread in different years as per the adjustment made by the employer the benefit of tax rebate is admissible. The Tribunal has rightly invoked the provision of Section 89 of the Act.

We, thereofore, answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. However, there shall be no order as to costs.




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