LexT.K. GINARAJAN versus THE COMMISSIONER OF INCOME TAX,COCHIN, KERA LA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
(2013) 7 S.C.R. 813 T.K. GINARAJAN v. THE COMMISSIONER OF INCOME TAX,COCHIN, KERA LA (Civil Appeal No. 5216 of 2002) AUGUST 1, 2013. [SUDHANSU JYOTI MUKHOPADHAYA AND KURIAN JOSEPH, JJ.] Income Tax Act, 1961: ss.2(24), 15, 16 and 17 - "Income': "salary", "perquisite" A B c - Connotation of - Deduction of 40% of the incentive bonus paid to Development Field Officer of UC prior to 1.4.1989 claimed as expenditure incurred for canvassing business - 0 Held: Incentive bonus has to be treated as salary, subject to permissible deductions u/s 16 - Expenses incurred in the performance of duty as Development Officer for generating the business so as to make him eligible for the incentive bonus is not a permissible deduction and, therefore, the same E is exigible to tax. The appellant, a Field Officer in Life Insurance Corporation of India, claimed in the income tax return deduction of 40% of the incentive bonus paid to him prior to 1.4.1989 on the ground that he had incurred F expenditure to the extent of 40% of the incentive bonus for canvassing business. His claim was declined by the Assistant Income Tax Officer and the Commissioner of Income-Tax (appeals). The Tribunal held against the Revenue, but the High Court held in favour of Revenue. G in the instant appeal, the question for consideration before the Court was: whether the incentive bonus paid to the Development Officers by the Life Insurance 813 H 814 SUPREME COURT REPORTS [2013) 7 S.C.R. A Corporation prior to 01.04.1989 would form part of the salary and, thus, exigible to income tax. Dismissing the appeal, the Court HELD: 1.1. The incentive bonus paid to the employee B by the employer is nothing but salary since such payments are covered by the exhaustive defihition of 'salary' u/s 17(1) of the lncoem Tax Act, 1961. The inclusive definition of 'salary', 'perquisite' and 'profits' in lieu of salary is given u/s 17 of the Act. It is now trite law C that the Income-Tax Act is a complete code as far as tax on income is concerned. 'Income' is defined u/s 2(24) of the Act and the computation of income is provided under Chapter-Ill of the Act (starting with s.10). In the case of salaried persons, the only permissible deduction is u/s D 16 of the Act. [para 4] (818-A-D] Commissioner of Income-Tax vs. M.D. Patil (1998) 229 ITR 71 (Karnataka); K.A. Choudary vs. Commissioner of Income-Tax and Others (1990) 183 ITR 29 (Andhra E Pradesh); Commissioner of Income-Tax vs. E. A. Rajendran (1999) 235 ITR 514 (Madras); Commissioner of Income-Tax vs. P. Arangasamy and Others (2000) 242 ITR 563 (Madras); Commissioner of Income-Tax vs. Sri Anil Singh (1995) 215 ITR 224 (Orissa); Commissioner of Income-Tax vs. Gopal F Krishna Suri (2001) 248 ITR 819 (Bombay); Commissioner of Income-Tax vs. Ram/al Agarwala (2001 )250 ITR 828 - approved. G State of West Bengal and Others vs. Texmaco Limited (1999) 1 sec 198 distinguished. 1.2. What is excluded u/s 10(14) as it stood prior to 01.04.1989 is the expenses incurred in the performance of the duty. It is for the employer to certify the actual expenses incurred in the performance of duty and in H which case, as clarified by the CBDT, to that extent, the T.K. GINARAJAN v. COMMISSIONER OF INCOME 815 TAX.COCHIN, KERALA same shall not be shown as part of salary. There is no A claim by the employee either for reimbursement or exclusion of the actual e~penditure incurred in performance of the duty. Compartmentalization of income under various heads and computation of the taxable portion strictly in accordance with the formula of B deductions, rebates and allowances are to be done only as per the scheme provided under the Act. Kiranbhai's case decided by the High Court of Gujarat does not lay down the correct principle of law. [para 8-9] [821-B-D, F- G, H; 822-A] C Karamchari Union, Agra vs. Union of India and Others 2000 (2) SCR 33 = (2000) 3 sec 335 - relied on. Commissioner of Income-Tax vs. Kiranbhai H. She/at and Another (1999) 235 ITR 635 - disapproved. D 1.3. The appellant being a salaried person, the incentive bonus received by him prior to 01.04.1989 has to be treated as salary. and he is entitled only for the permissible deductions u/s 16 of the Act. The expenses E incurred in the performance of duty as Development Officer for generating the business so as to make him eligible for the incentive bonus is not a permissible deduction and, therefore
Excerpt shown. Read the full judgment & AI analysis in Lexace.