THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA REFERRED CASE No.110 of 2000 (On being mentioned) ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) In our order dated 30.11.2011 the question referred to this Court was inadvertently answered “in the negative in favour of the Revenue and against the assessee”. Subsequently, when we were dealing with the other connected matters we noticed that in this case when the assessee (an LIC Officer) claimed 40% deduction of the incentive bonus paid by the employer, while processing the return under Section 143(1)(a) of the Income Tax Act, 1961 (the Act), the same was disallowed. As held by the Supreme Court in Kvaverner John Brown Engg. (India) P.Ltd v Assistant Commissioner of Income Tax[1], at the time of processing the return under Section 143(1) (a) of the Act, except adjusting the arithmetical/clerical errors, the Assessing Officer cannot make adjustments, especially, when the issues are debatable. In this case as found by the Tribunal when the adjustments were made, the issue whether incentive bonus can be claimed as a deduction was debatable, and the case of this Court in Commissioner of Income Tax v B. Chinnaiah[2] came subsequently. In view of this, the Senior Counsel for Income Tax fairly accepts that the mistake has crept in the order. Therefore, while directing that this order shall form part of the order dated 30.11.2011, we further direct that the penultimate paragraph in the earlier order shall be deleted and the following paragraph shall be substituted. “The Referred Case is answered in the affirmative in favour of the assessee and against the Revenue holding that the adjustments including disallowance bonus while processing returns under Section 143(1) of the Act are not permissible under law”. _______________ (V.V.S.RAO, J) ____________________ (B.N.RAO NALLA, J) 26.12.2011 vs [1] (2008) 305 ITR 103 (SC) [2] (1995) 214 ITR 368