Honble ARORA, J. – The Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, under Section 256 (1) of the Income Tax Act, in the case of the assessee for the Assessment year 1986-87, referred the following question of law for the opinion of this Court- ``Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in directing to allow 50% deduction of incentive bonus received by the assessee from the L.I.C. of India relying on Boards Circular No. 14/9/65-IT (A-I) dated 22-9-65 which in fact is applicable to L.I.C. agent and not to the Development Officer. The cases of the Development Off- cer are governed by the Boards Circular F.No. 200/127/84- IT (A) dated 29-9-87/14-10-87. (2). The assessee was working as the Development Officer with the L.I.C. of India. During the previous year relevant to Assessment Year 1986-87, the assessee received a sum of Rs. 68,206/- as incentive bonus from the L.I.C. and he claimed 40% deduction (Rs. 27,282/-) on this incentive bonus. The Income Tax Officer, Sirohi, by his order dated 24-3-87, relying upon the judgment of the Jaipur Bench of the Tribunal in ITA No. 490/JP/94 (I.T.O. vs. K.M. Baheti disallowed this claimed deduction. While disallowing the deduction, the Assessing Officer held that the incentive bonus received by the assessee is the part of the salary in the hands of the assessee and no deduction is permissible since the Standard Deduction under Section 16(i) of the Act has already been allowed. The Income Tax Officer further held that the assessee is an employee of the L.I.C. of India and any receipt by the assessee from the L.I.C. of either nature will be included and taxed under the head ` Income from salary under Section 15 of the Act. (3). The assessee, dissatisfied with the order dated 24-3-87 passed by the Income Tax Officer disallowing the deduction, preferred an appeal before the Assistant Commissioner, Income Tax (Appeals), Udaipur. (3). The assessee, dissatisfied with the order dated 24-3-87 passed by the Income Tax Officer disallowing the deduction, preferred an appeal before the Assistant Commissioner, Income Tax (Appeals), Udaipur. The Assistant Commissioner (Appeals), by his order dated 29-12-88, relying upon the judgment of the Income Tax Appellate Tribunal, Chandigarh, as well as on the judgment of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur in I.T.A. No. 334 of 1987 and 335 of 1987 in the case of Moti Lal Mohnot, Pali vs. Income Tax Officer, decided on 21-11-86, allowed the appeal filed by the assessee and directed the Income Tax Officer to allow deduction as claimed by the assessee. The Revenue, aggrieved of the order dated 29-12-88, passed by the Assistant Commissioner Income Tax (Appeals), Udaipur, preferred an appeal before the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur. The appeal filed by the Revenue was heard by the Tribunal at Jodhpur and the Tribunal, by its order dated 19-1-90, dis- missed the appeal filed by the Revenue on the ground that the majority of the decisions of the Jaipur Bench of the Tribunal are in favour of the assessee and against the Revenue. Dissatisfied with the order dated 19-1-90 passed by the Tribunal dismissing the appeal filed by the Revenue, the Revenue moved an application under Section 256(1) of the Act to the Tribunal to refer the questions of law mentioned in the application for the opinion of the High Court. The Income Tax Appellate Tribunal, by its order dated 15-4-91 referred the question, mentioned in para No. 1 above, for the opinion of this Court. (4). It is contended by the learned counsel for the Revenue that the in- centive bonus paid to the assessee by the L.I.C. falls within the meaning of `salary and it would be chargeable to tax under the head `salary and the only deduction permissible under the law are those specified in Section 16 of the Act. In support of his contention, learned counsel for the Revenue has placed reliance over CIT vs. B. Chinnaiah and Others (1), CIT vs. Govind Chandra Pani (2), K.A. Chouary vs. CIT and Others (3), K.Krishna Murthy and Others vs. CIT, A.P., Hyderabad and Others (4), Gestetner Duplicators Pvt. Ltd. vs. CIT, West Bengal (5), CIT, U.P. vs. Hind Lamps Ltd. and Others (6) and CIT vs. Sri Anil Singh (7). (5). (5). Learned counsel for the assessee, on the other hand, has submit- ted that the annual remuneration paid by the Corporation to the Development Officer, as per the Rules of the Service does not include incentive bonus paid to him. As per rule 7, the annual remuneration includes the basic pay, personal pay, dearness allowance and other allowances but does not include the incentive bonus. It has further been submitted by the learned counsel for the assessee that the incentive bonus is a production oriented income and becomes payable to the Development Officer on achieving the higher target. When his actual performance is beyond the normal levels of performance expected of him, he has to incur expenditure in respect of (i) entertainment to the agents and the clients, (ii) conveyance facilities to his agents, (iii) prizes declared in competition amongst his agents, (iv) office expenses such as the rent, secretarial assistance, printing and stationery, postage, trunk calls and telephone charges etc. It has further been submitted by the learned counsel for the assessee that every Development Officer will not get the incentive bonus and it is payable only to those persons who are eligible under Clause (iv) of the Conditions and, therefore, the payment made to the Development Officer (assessee) as incentive bonus cannot be treated as the `salary. The incentive bonus is not paid as a term of contract or business but is based on the business done by the Development Officer, therefore, it is a business or professional earning and is not a result of the relationship of employer and the employee. In support of his contention, learned counsel for the assessee has placed reliance over Gestetner Duplicators (Pvt.) Ltd. vs. CIT, West Bengal (supra). (6). Learned counsel for the assessee, also, submitted that the quantum of incentive bonus is decided taking into consideration certain factors, such as the number of the policies procured by the Development Officer, his agents, organisation, the nature of the territory operated by him, i.e. whether rural or urban. These factors increase the size of his expenditure and, therefore, these are the necessary expenditure which have to be incurred by the Development Officer for earning the incentive bonus and, therefore, they are allowable expenditure as has been allowed to the insurance agents vide Boards Circular No. F.88/2/57/IT (A.I) dated 18-10-68. These factors increase the size of his expenditure and, therefore, these are the necessary expenditure which have to be incurred by the Development Officer for earning the incentive bonus and, therefore, they are allowable expenditure as has been allowed to the insurance agents vide Boards Circular No. F.88/2/57/IT (A.I) dated 18-10-68. The nature of the duties of the Development Officer and the insurance agent are the same and being a beneficial Circular it should be interpreted liberally and the benefit of this Circular should, also be extended to the Development Officer. In support of this contention, learned counsel for the assessee has placed reliance over R.S. Madananppa (deceased) after him by his Legal Representatives vs. Chandramma and Another (8), M/s. Ellerman Lines Ltd. vs. CIT, West Bengal (9). It has, also, been submitted by the learned counsel for the assessee that while construing the fiscal/tax statute, one must have a regard to the strict nature of the law and not merely the spirit of the statute or substance of the law. In support of his contention, learned counsel for the assessee has placed reliance over Polestar Electronics (Pvt.) Ltd. vs. Additional Commissioner, Sales Tax, and Another (10). (7). Learned counsel for the assessee has, also, raised three preliminary objections that (i) no question of law arises in the matter and the findings arrived-at by the Tribunal are purely findings of facts and the Revenue never contested nor raised the ground as to under which head the incentive bonus can be charged to tax: (ii) the tax effect in the present reference is below Rs. 30,000/- and, therefore, as per the Police Decisions of the Central Board of Direct Taxes, no question of law is to be raised at the instance of the Revenue: and (iii) the Tribunal has not given any finding: whether the income was from the business or from profession. Learned counsel for the assessee, therefore, prayed that the reference may be retur- ned unanswered. In support of his contention, learned counsel for the assessee has placed reliance over CIT vs. A.A. Baniyan (11), CIT vs. N.C. Shah (12), CIT vs. Income Tax Appellate Tribunal and Another (13) and CIT vs. Sarat Chand Saha (14). (8). We have considered the submissions made by the learned counsel for the parties. (9). In support of his contention, learned counsel for the assessee has placed reliance over CIT vs. A.A. Baniyan (11), CIT vs. N.C. Shah (12), CIT vs. Income Tax Appellate Tribunal and Another (13) and CIT vs. Sarat Chand Saha (14). (8). We have considered the submissions made by the learned counsel for the parties. (9). Before dealing with the real controversy we would first like to take-up the preliminary objections raised by the Learned counsel for the assessee. The first preliminary objection raised by the learned counsel for the assessee is that no question of law arises in the present case and the findings arrived-at by the learned Members of the Tribunal are purely findings of facts and the Revenue neither contested nor raised any issue as to under which head the incentive bonus could be charged and, therefore, the reference should be returned unanswered. The jurisdiction vested in the High Court under Section 256 of the Act is advisory jurisdiction. The object in making the reference is to get a decision from the High Court on a problematic or debateable question of law. The High Court is not expected, under Section 256 of the Act, to investigate or examine the facts of the case because it is neither a Court of Appeal nor the Court of Revision. Section 256 of the Act excludes from the jurisdiction of the High Court the question of fact and the party cannot ask for a reference on a question of fact. It is only the question of law which arises out of the order passed by the Tribunal that the reference can be made and the opinion of the High Court can be obtained on that question of law. (10). In the present case there are conflicting judgments of the Tribunal on the issue. whether the assessee, who is a Development Officer, is eligible for any deduction towards the expenses out of the incentive bonus paid to him under the Incentive Bonus Scheme of the L.I.C.? The Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (ITA No. 496/JP/1984-ITO vs. K.M. Baheti), for the Assessment Year 1981-82, took the view that ``the Development Officer of the L.I.C. cannot be equated to an agent. The Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (ITA No. 496/JP/1984-ITO vs. K.M. Baheti), for the Assessment Year 1981-82, took the view that ``the Development Officer of the L.I.C. cannot be equated to an agent. In agent, the relationship is that of the agent and the principal while the assessees relationship with the L.I.C. is that of the employee and the employer and since incentive bonus is part of the salary, he is allowable the Standard De- duction only as permissible under Section 16 of the Act. The Tribunal, in Bahetis case, further held that ``the deduction of any expenditure out of the incentive bonus is not permissible while the Jaipur Bench of the Tribunal, in the case of Sri Shiv Raj Bhatia vs. ITO (ITA No. 1124/JP/1987), R.P. Kunteta vs. ITO, Jaipur (ITA No. 334 and 335/JP/1987) and Moti Lal Moh- not vs. ITO, Pali (ITA No. 905/JP/1987) has taken the contrary view that ``the expenses incurred by the Development Officer for the purpose of earning the incentive bonus should be deducted from the incentive bonus at the starting point of its source. The learned Members of the Tribunal, while allowing the deduction on the incentive bonus, relied upon the Circu- lar of the Board, which is applicable to the insurance agents. In view of the conflicting decisions of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, the decision of the High Court is necessary to resolve this problematic and debateable question of law. The question regarding the applicability of the Boards Circular to the Development Officer of the L.I.C. and whe- ther the Circular has been rightly applied or it has been misunderstood or misconstrued, also, is the question of law which requires to be adjudicated and decided by the High Court. (11). In CIT vs. P.A. Baniyan (supra), the assessee, who was working as the Development Officer in the L.I.C. of India, during the relevant assess ment year, received incentive bonus apart from the salary. The Tribunal held the incentive bonus as the professional income of the assessee for these years and allowed 40% deduction on the incentive bonus. The finding that the income of the assessee is the professional income was not under challenge and the only question referred to the High Court for adjudication was the allowing of 40% deduction. The Tribunal held the incentive bonus as the professional income of the assessee for these years and allowed 40% deduction on the incentive bonus. The finding that the income of the assessee is the professional income was not under challenge and the only question referred to the High Court for adjudication was the allowing of 40% deduction. Therefore, the Division Bench of Bombay High Court returned the question of law unanswered as the deduction so allowed is based on the findings of fact as to the quantum of the expenditure to be incurred by the assessee for the purpose of earning the incentive bonus. Likewise, in CIT vs. N.C. Shah (supra) the Tribunal held that ``the incentive bonus received by the assessee from the L.I.C. was not salary income but the income from the business or profession. The Tribunal, also, held that ``on such incentive bonus the assessee was entitled to deduction @ 40% of the incentive bonus by way of estimated expenditure for earning the income for which the incentive bonus was paid. (12). These cases are, therefore, not applicable to the case in hand because in the present case there is a conflict of views expressed by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur in the various judgments. The question whether the Circular issued by the Central Board of Direct Taxes relating to the allowance of the expenditure to the insurance agents is applicable to the case of the Development Officer of the L.I.C. or not, has, also to be decided and to be given finality. We are, therefore, of the opinion that the question of law does arise in the present case and the reference, therefore, cannot be returned unanswered. The preliminary objection raised by the learned counsel for the assessee is, therefore, bereft of any substance. (13). The next preliminary question raised by the learned counsel for the assessee is that as per the C.B.D.T. Circular, where the tax effect is less than Rs. 30,000/-, no question of law is to be raised at the instance of the Revenue. In Commissioner of Wealth Tax vs. Executors of late (Shri) D.T. Udeshi (15) the Division Bench of Bombay High Court, in a writ petition discharged the rule on the ground that the Board has taken a Policy Decision not to file reference in the case where the tax effect is going to be less than Rs. In Commissioner of Wealth Tax vs. Executors of late (Shri) D.T. Udeshi (15) the Division Bench of Bombay High Court, in a writ petition discharged the rule on the ground that the Board has taken a Policy Decision not to file reference in the case where the tax effect is going to be less than Rs. 30,000/- It is true that the tax effect in the present case is less than Rs. 30,000/- per year so far as the case of the assessee is concerned, but looking to the question of law involved in the various cases, it cannot be said that the collectively in all the cases the tax effect will be less than Rs. 30,000/- per year. If all the cases are taken together in which the same points were involved, the tax effect will be more than Rs. 30,000/- Moreover, there is a conflict of the opinion of the two Benches of the ITAT, Jaipur Bench, Jaipur itself and the question, also, relates to the applicability of the Boards Circular to the Development Officers of the L.I.C. and, therefore the reference cannot be returned unanswered on this ground alone that the tax effect is less than Rs. 30,000/-. In order to maintain certainity and uniformity in administering the law and to maintain the judicial discipline, it is necessary that the conflicts of the opinion between the two Benches of the Tribunal should be set at rest and a clear guide-line is to be provided to the Taxing Authority to make the assessment in accordance with law and not to put them in a fix which of the judgments of the Tribunal laying down a contradictory law on the point is to be followed. In this view of the matter, the reference cannot be returned unanswered. The decision on the question referred for the opinion of the High Court is necessary in order to finally decide the law on the point so far as this Court is concerned. The preliminary objection raised by the learned counsel for the assessee is, therefore, devoid of any substance. (14). The next preliminary objection raised by the learned counsel for the assessee is that the Tribunal has not recorded any finding whether the income was from the business or profession and, therefore, the case may be returned to the Tribunal for stating the case afresh. (14). The next preliminary objection raised by the learned counsel for the assessee is that the Tribunal has not recorded any finding whether the income was from the business or profession and, therefore, the case may be returned to the Tribunal for stating the case afresh. To support this con- tention, learned counsel for the assessee has placed reliance over CIT vs. Sarat C.S. Sahu (supra). In the case of Sarat C.S. Sahu, the Tribunal held that the incentive bonus was part of the salary of the assessee but allowed the deduction treating the same to be the income from the business. As two contradictory conclusions have been arrived at by the Tribunal, therefore, the Division Bench of the Orissa High Court remanded the case to the Tribunal to consider the basic question : whether the amount forms part of the salary or was earned from business. But in the case in hand, the Tribunal has not given any contradictory finding. The Tribunal has not given any finding that the income earned by the assessee from the incentive bonus is part of the salary or it has been earned from the business or profession, but allowed the deduction treating the income as the business income. In view of the fact that the deduction has been allowed by the Tribunal, the income earned by the Development Officer from the incentive bonus has been treated as the business or professional income which has been challenged by the Revenue and, therefore, it is not necessary to remit the case to the Tribunal. The case relied-upon by the learned counsel for the assessee is, therefore, not applicable to the present case. The preliminary objection raised by the learned counsel for the assessee is, therefore, devoid of any substance. (15). The main question which, therefore, requires consideration is : whether the `incentive bonus earned by the assessee falls within the meaning of `salary or is a business or professional income and if so the assessee is entitled for deduction on the amount of the part of the incentive bonus spent by the assessee for earning of the incentive bonus? (16). The test is to determine whether the income accrued by virtue of his office and the payment is made to him as the reward or acting as the employee of the insurance company? (16). The test is to determine whether the income accrued by virtue of his office and the payment is made to him as the reward or acting as the employee of the insurance company? It is, no doubt, true that the incentive bonus is a production oriented income and if a person achieves the higher production, he is entitled for higher incentive bonus. The quantum of incentive bonus is decided taking into account the factors such as the number of the policies procured by the Development Officer, his agents or organisation etc. and in the process of earning incentive bonus some expenditure have to be incurred by him. As per the Instructions of the L.I.C., a Development Officer has the following duties and obligations to perform: ``(4) DUTIES AND OBLIGATIONS :– (A) His duties as a Development Officer shall be :– (i) To develop and increase the production of life insurance business in a planned way as far as may be practicable in the area that may be allotted to him or in which he is allowed to work from time to time through the agents placed under his supervision by the Corporation and in consonance with the corporate objectives of the Corporation. (ii) To guide, supervise and direct the activities of the agents, placed under his supervision by the Corporation. (iii) To introduce suitable persons to the Corporation for appointment as new agents. (iv) To act generally in such a way as to activise existing agents and motivate new agents, so as to develop a stable agency force. (v) To render all such services to policy holders as conduce to better policy servicing. (vi) To carry out investigation of claims, revival of lapsed policies and liaison work in connection with salary savings scheme business. (vii) To perform such other duties as may be entrusted or assigned to him from time to time. (viii) He shall ensure that the agents in his organisation conduct their work and/or business strictly in accordance with the provisions of the Insurance Act, 1938; and rules framed thereunder and such other rules and regulations that Corporation may issue from time to time and the LIC of India (Agents) Regulations, 1972 as amended from time to time and in the best interest of the Corporation. (b) ... ... ... ... ... ... ... ... ... ... (c) ... ... ... ... ... ... ... ... ... (b) ... ... ... ... ... ... ... ... ... ... (c) ... ... ... ... ... ... ... ... ... ... (16) According to Sub-clause (j) of Clause (ii) of rule 12(2) of the Terms and Conditions of the Service Applicable to the Development Officers, the `gross yearly salary means the aggregate of the monthly basis pay, special pay, personal pay, dearness allowance and all other allowances which may be allowed to a Development Officer for any such succeeding year if the terms of his appointment are fulfilled, and shall include any non-profit sharing or ex gratia bonus payable in that year and an estimate of the expenditure that may be allowed during that year in respect of the travelling, residential, telephone and insurance premium and tax on motor-vehicle but shall not include any incentive bonus or additional conveyance alloance that may be accrued to him. (17). Section 15 of the Income Tax Act, 1961 specifies the income as chargeable to income tax under the head `salary. `Salary has been defined in Section 17 as well as in Sections 10(10), 36(1) (iia) and 40-A (5) of the Act. The word `salary, `perquisite and `profits in lieu of salary are defined in Section 17 for the purpose of Sections 15 and 16. Section 17 of the Income Tax Act states that :– ``For the purpose of Sections 15 and 16 and of this Section ;– (1) `Salary includes - (iv) any fees, commission perquisites or profit in lieu of or in addition to any salary or wages. (18) Sub-section (3) of Section 17 defines the `profit in lieu of the salary which includes (i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto; (ii) any payment (other than any payment referred to in clause (10), Clause (10-A), Clause (10-B), Clause (11), Clause (12) or Clause (13-A) of Section 10 due to or received by an assessee from an employer or a former employer or from a provident or other fund (not being an approved superannuation fund) to the extent to which it does not consist of contributions by the assessee or interest on such contributions. (19). (19). Thus, according to these provisions if the incentive bonus falls within the meaning of `salary or `perquisites or `profits in lieu of salary within the meaning of these expressions under Section 17 it would be chargeable to the tax under the head `salary. (20). In CIT vs. B. Chinnaiah and Ors. (supra), the question : whether the incentive bonus received by the Development Officer of the LIC can be treated as a part of the salary or perks and is taxable under the head `salary, came-up for consideration before the Division Bench of Andhra Pradesh High Court and the High Court, after considering the law on the point, held that ``the incentive bonus : whether treated as a part of the salary or perks, is taxable under the head `salary and the permissible deduction under the said head are as specified under Section 16 of the Act and if any expenditure does not fall within the meaning of Section 16, it cannot be allowed. (21). In CIT vs. Govind Chandra Pani (supra), the Division Bench of the Orissa High Court held that ``incentive bonus which the assessee as the Development Officer gets from the employer, the Life Insurance Corpora- tion partakes of the character of salary as defined under Section 17 of the Income Tax Act and is chargeable to the Income Tax under Section 16 of the Act. (22). In : K.A. Choudhary vs. Commissioner of Income Tax and Ors. (supra), the assessee, who was employed as a Development Officer in the Life Insurance Corporation of India received a sum of Rs. 9526/- as incentive bonus and claimed deduction of the expenditure incurred in earning the bonus. The Income Tax Officer declined to allow the deduction claimed by the assessee on the ground that the incentive bonus was the part of the salary for which standard deduction was allowed. The order passed by the Income Tax Officer was confirmed by the Commissioner and by the Income Tax Appellate Tribunal in the appeal. In the writ petition filed before the High Court, the Division Bench of the Andhra Pradesh High Court held that ``the assessee received the amount of incentive bonus because he was in the employment of the Life Insurance Corporation and, therefore, it forms the part of the `salary. (23). In : K.M. Krishnamurthy and Ors. In the writ petition filed before the High Court, the Division Bench of the Andhra Pradesh High Court held that ``the assessee received the amount of incentive bonus because he was in the employment of the Life Insurance Corporation and, therefore, it forms the part of the `salary. (23). In : K.M. Krishnamurthy and Ors. vs. CIT, Andhra Pradesh, Hyderabad (supra), the Division Bench of Andhra Pradesh High Court held that ``the definition of `perquisites in Section 17(2) begins with the words `perquisites includes. The definition is therefore comprehensive. Cash allo- wances are included in the ordinary meaning of the `perquisites and would fall under Section 17(2). City compensatory allowance, bad climate allowance, shift allowance and incentive bonus are `perquisites within the meaning of Section 17(2) and therefore they constitute taxable receipts. (24). In Gestetner Duplicator Pvt. Ltd. vs. C.I.T., West Bengal (supra), the Supreme Court held that `if under the terms and conditions of the employment remuneration or recompense for the services rendered by the employee is determined at a fixed percentage of turnover achieved by him then such remuneration or recompense will partake of the character of salary, the percentage basis being the measure of the salary and, therefore, such remuneration or recompense must fall within the expression `salary as defined in r. 2 (h) of Part A of the Fourth Schedule to the Act. (25). In CIT, UP vs. Hind Lamps Ltd. (supra) , the Division Bench of Allahabad High Court held that ``profit bonus comes within the ambit of Section 17(3) (ii), for it is an amount paid by the employer to its employee. (26). In : CIT vs. Sri Anil Singh (supra), the Division Bench of the Orissa High Court held that ``for the purpose of Section 17 of the Income Tax Act, 1961, there is no difference between the commission which is wholly dependable upon the work done and the fixed salary on the periodical footing. (17). Now, the question which requires consideration is : whether the incentive bonus received by the assessee from the L.I.C. is the part of the salary or it is an income from the business and is entitled for deduction. `Salary is the remuneration paid by the employer to its employee for the work done or services rendered by him. (17). Now, the question which requires consideration is : whether the incentive bonus received by the assessee from the L.I.C. is the part of the salary or it is an income from the business and is entitled for deduction. `Salary is the remuneration paid by the employer to its employee for the work done or services rendered by him. The assessee is being remunerated partly by payment of fixed salary and partly on the basis of the dividend, i.e., the business procured by him. The incentive bonus is linked with the percentage of business secured in excess of certain stipulated premium income. Payment of incentive bonus is relatable to employment and is not exempted under Section 10 of the Act. It is not a payment made on personal or extra employment consideration. It is linked with the relationship of employee and employer. The Development Officer, under the Scheme, gets the incentive bonus being an employee of the L.I.C. Clause (iv) of the Scheme of the Incentive Bonus, which deals with the eligibility, states that ``a Development Officer, whose cost ratio (i.e. the ratio of his annual remuneration in an appraisal year to the eligible premium in that year) did not exceed 20% in the appraisal year shall only become eligible for grant of the incentive bonus in respect of that appraisal year in accordance with the scheme. The incentive bonus paid by the L.I.C. to the Development Officer is an emolument of the office which is paid by the L.I.C. to its employee, i.e., the Development Officer for negotiating for enhancement of the business. The payment of incentive bonus is, therefore, due to the relationship of the employer and the employee. This relationship is a sine qua non for the grant of incentive bonus. The incentive bonus paid to the Development Officer is not a personal gift but is paid as a remuneration for his services as an employee and, therefore, it forms the part of the `salary. Thus the incentive bonus is part of the salary of the assessee and is exigible to tax and the assessee is entitled only for the standard deduction permissible under Section 16 of the Income Tax Act. (28). Thus the incentive bonus is part of the salary of the assessee and is exigible to tax and the assessee is entitled only for the standard deduction permissible under Section 16 of the Income Tax Act. (28). The next question which requires consideration is : whether the assessee is entitled for the benefit available under the C.B.D.T. Circular No. F.8/2/68 -IT (A.I) dated 18.10.68 issued with respect to the commission earned by the insurance agents of the L.I.C. of India and the allowance of expenditure. According to this Circular, an ad hoc deduction for the expenses upto 40% of the first years commission and 15% of the renewal commission subject to maximum of Rs. 6000/- where the gross insurance commission does not exceed Rs. 20,000/- for the year and subject to maximum of Rs. 10,000/- in cases where commission exceeds Rs. 20,000/- per year, is allowed to the insurance agents in certain circumstances on the business procured by them. The L.I.C. agents, working for the Corporation on commission basis, are not the employees of the Corporation while the Development Officers working in the L.I.C. are the employees of the Corporation and it is on account of this relationship that the Development Officer is rewarded in the form of incentive bonus for the extra labour he puts in in procuring the business. The Circular issued by the Board allowing certain deductions to the extent of 40% to the insurance agents, therefore, cannot apply to the cases of the Development Officers. The applicability of this Circular to the Development Officers came-up for consideration before the Central Board of Direct Taxes itself. The Board issued Instruction No. 1774 clarifying its stand regarding the applicability of the Circular to the Development Officers. Clause (3) of the Circular No. 1774 reads as under:– ``(3) The Board wishes to clarify that the aforesaid instructions refer to the commission earned by insurance agents and provides for a deduction of a fixed percentage on account of expenses for earning the commission where no detailed accounts regarding expenses are maintained. But the cases of the Development Officers are quite different in as much as they are not doing any agency business but are paid employees of the Life Insurance Corporation. Their duties involve appointments of the agents, training them and helping them in the sale of insurance policies but they themselves cannot act as agents. But the cases of the Development Officers are quite different in as much as they are not doing any agency business but are paid employees of the Life Insurance Corporation. Their duties involve appointments of the agents, training them and helping them in the sale of insurance policies but they themselves cannot act as agents. There is a clear employer-employee relationship between the Life Insurance Corporation and the Development Officer. The payment received by the Development Officers as incentive bonus or bonus commission (or by any other name) is for the work done for the employer. It is in lieu of or in addition to sala- ry and forms part of salary by virtue of Section 17(1) (iv) of the Income Tax Act, 1961. The Boards Circular dated 18.10.68 which relates to the allowance of expenditure to the insurance agents of the L.I.C. only, is not applicable in the case of the Development Officer. The Development Officer is the paid employee of the Life Insurance Corporation. He receives the incentive bo- nus for the work done by him for the Corporation. It is the recompense for the work done or for the services rendered by him in the capacity of the employee of the Corporation. The insurance agents is not an employee of the Corporation. He only gets the commission for the work procured by him for the Corporation. The Boards Circular, which was issued for the grant of allowance of expenses to the insurance agents, therefore, cannot apply in the case of the Development Officer, even howsoever liberal construction may be given to the Notification because the Circular restricts its ambit to give relief to the L.I.C. agents only. (29). In Polester Electronics (Pvt.) Ltd. vs. Additional Commissioner, Sales Tax and Another (supra), the Supreme Court held that ``in construing a tax statute one must have regard to the strict letters of the law and not merely the spirit of the statute or the substance of the law. If the Legislature has failed to clarify its meaning by the use of appropriate language, the benefit should go to the assessee. Even if there is a doubt, it must be reso- lved in favour of the subject. If the Legislature has failed to clarify its meaning by the use of appropriate language, the benefit should go to the assessee. Even if there is a doubt, it must be reso- lved in favour of the subject. The ratio of this case does not show that the benefit of the exemption granted by the Circular to a particular class of persons, i.e., the L.I.C. agents, who are not the employees of the Corporation, can be extended to the Development Officers who are the employees of the Corporation, even if to some extent their duties are the same. The Circular is meant only for the insurance agents and is not applicable to the Devleopment Officers. The judgment of the Apex Court, therefore, does not apply to the facts and the circumstances of the present case. (30). The other judgments of the Supreme Court, i.e., Navnil Lal C. Javeri vs. K.K. Sen (16) and M/s. Ellerman Limes Ltd. vs. Commissioner of Income Tax, W.B.1, Calcutta (supra), on which reliance has been placed by the learned counsel for the assessee, are also, not applicable to the present case and the controversy raised in the present case is different from what was decided by the Supreme Court in the aforesaid cases. In this view of the matter, the Tribunal was, therefore, not justified in applying this Circular in the case of the Development Officer (assessee) and allowing 50% deduction to the assessee on the basis of the Circular F.No. 14/9/65 IT (A.I) dated 22.9.65. (31). We, therefore, answer the question in the negative, i.e., in favour of the Revenue and against the Assessee and it is held that the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur was not justified in directing to allow 50% deductions of the incentive bonus received by the assessee from the Life Insurance Corporation of India, relying on the Boards Circular which is applicable only to the L.I.C. agents and not to the Development Officers and the case of the Development Officers are governed by the Boards Circular No. 1774.