Allowed

Commr.of I.T. Visakhapatnam v. Shri T.v.Krishna Rao Vijayawada

Telangana HC22 Feb 2010RC/95/1996

Case brief

AI extract

What is this about?

On a reference under section 256(1) raised by the ITAT, the Court held that 40% incentive bonus from LIC is not permissible as a deduction under section 16(1) without a central government notification specifying allowable expenses, relying on a prior Division Bench decision.

What did the court decide?

The question referred to the Court is answered in favour of the respondent.

Commr.of I.T. Visakhapatnam Vs Shri T.v.Krishna Rao Vijayawada — Income Tax | Telangana HC (2010)

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IN THE HIGH COURT OF JUDICATURE ANDHRA PRADESH AT HYDERABAD

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MONDAY THE TWENTYSECOND DAY OF FEBRUARY TWO THOUSAND AND TEN

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PRESENT

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THE HONOURABLE SRI JUSICE B. PRAKASH RAO AND THE HONOURABLE SRI JUSTICE REDDY KANTHA RAO

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REFERRED CASE No. 9 5 OF 1996

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{under section 256 (1) of the Indian Income Tax Act, 1961 in RA.No.615 & 616/Hyd/1988, dated 08-08-1995 Andhra Pradesh of ITAT Hyderabad Bench ‘A’}

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Between:

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The Commissioner of Income-tax Viskahapatnam …. Petitioner

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V/s.

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TV Krishna Rao, Vijayawada …. Respondent

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Counsel for the Applicant : Sri S.R. Ashok Senior Counsel

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Counsel for the Respondent: None appeared

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THE HONOURABLE SRI JUSTICE B. PRAKASH RAO AND THE HONOURABLE SRI JUSTICE REDDY KANTHA RAO

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REFERRED CASE No. 9 5 of 1996

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J U D G M E N T : (Per the Hon'ble Sri Justice B.Prakash Rao)

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RC.No. 95 of 1996 is referred to this Court by the IncomeTax Appellate Tribunal, A.P., Hyderabad under section 256 (1) of the Indian Income Tax Act, 1961 in RA.No. 615 and 616/Hyd/1988 dated 08-08-1995 Andhra Pradesh of ITAT Hyderabad Bench ‘A’ on its file for decision on the following question of law viz.,

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“Whether on the facts and in the circumstances of the case, the ITAT was justified in holding that 40% of incentive bonus should be allowed as an expenditure in addition to the standard deduction under section 16 (1), more so, when the expenditure involved, if any, in travelling is covered by the conveyance allowance and additional conveyance allowance provided by the employer and exempted under section 10 (14) of the Income Tax Act, 1961 ?”

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2. Heard the learned standing counsel for Income-tax, Sri S.R. Ashok for the petitioner. Though served none appeared for the respondent herein.

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3. The question which has been referred to in regard to the entitlement of the deduction of 40% incentive bonus earned from the Life Insurance Corporation of India, which is now represented across the bar that the same is no longer res integra in view of the decision of this Court in COMMISSIONER OF INCOME-TAX V/s. B. CHINNAIAH AND ORS^[1] . , 214 ITR-368, wherein the Division Bench of this Court held that under section 10 (14) of the Indian Income Tax Act, 1961 such deduction is not permissible and there must be a notification by the Central Government specifying the extent to which the expenses are allowable. Following the said decision, the question referred to is answered in favour of the respondent.

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4. Accordingly, RC.No. 95 of 1996 is disposed of. No costs.

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__________________________ JUSTICE B. PRAKASH RAO

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______________________________________ JUSTICE REDDY KANTHA RAO

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22-02-2010. I s L

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THE HONOURABLE SRI JUSTICE B. PRAKASH RAO AND

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THE HONOURABLE SRI JUSTICE REDDY KANTHA RAO