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Section 143 of the Income-tax Act, 1961 - Assessment - Prima facie adjustment - Assessment year 1994-95 - Whether when a deduction claimed by assessee is somewhat controversial, it can be treated to be prima facie disallowable - Held, no - Assessee claimed deduction on incentive bonus - Assessing Officer treating it as a part of salary, made prima facie adjustment and disallowed claim while processing return of income under section 143(1)(a) - Whether Assessing Officer was justified - Held, no FACTS The assessee, a development officer in the Life Insurance Corporation of India, received incentive bonus from his employer and on the said sum he claimed 40 per cent deduction for the assessment year 1994-95. The Assessing Officer being of the view that such deduction was not allowable as the incentive bonus received by the assessee formed a part of his salary, made prima facie adjustment and disallowed the claim while processing the return under section 143(1)(a). On appeal, the Commissioner (Appeals) allowed the appeal and set aside the order of the Assessing Officer on the ground that the adjustment could not have been made, while passing the order under section 143(1)(a) as the said adjustment by its very nature was debatable. The revenue did not accept the order passed by the first appellate authority and filed an appeal before the Tribunal. The Tribunal concurred with the view expressed by the Commissioner (Appeals) holding that the issue of incentive bonus was of highly debatable nature and no such addition could be made. On appeal under section 260A : HELD On a plain reading of section 143(1)(a ), it is clear that if on the basis of the return filed by the assessee, any tax or interest is found out after adjustment, an intimation shall be sent to the assessee. Thus, it is manifest that when a deduction is claimed and it is somewhat controversial, it cannot be treated to be prima facie disallowable. If the claim made by the assessee is treated not to be free from debate and argument, it is bound to be regarded as a debatable issue. [Para 7] There is expression of divergent views by the High Courts on the issue of incentive bonus. [Para 8] In view of the…

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