Incentive arrears

No.

1. Incentives are part of your salary since it is earned during the course of employment. If not for your employment there would have not been an incentive. So there is no second thought on whether incentive will be a salary or not. 
2. However, there are no specific rules explaining whether such incentives will be considered as arrears of salary and relief can be claimed u/s 89. 
3. There is no specific definition for arrears of salary. On a plain understanding if it is paid in the year relating to the salary of previous years it will be considered as arrears of salary. The important point to be considered in here is such arrear salaries are declared and paid in the same year. There is no concept of declared in one year and paid in the other year. For example, Mr. A is receiving a salary from Company XYZ Ltd. Arrears of salary relating to FY 2017-18 would have been declared and paid during the FY 2018-19. The declaration and payment year is the same in here. Thus comes a relief u/s 89 which gives an advantage on account of increase in tax liability due to payment of salary which basically should have been taxed in the year 2017-18 in our above example. 
4. With respect to incentive, the above interpretation cannot be applied as incentives were already declared but it is yet to be paid subject to boar's approval. So we can say the incentives are declared during the year FY 2017-18 but it is paid during the year 2019-20. This scenario cannot be equated with salary arrears. 
5. According to sec 15 salary includes "any amount due from an employer or former employer whether paid or not" hence whether it is paid or not it will be taxable as soon as it is earned or accrued. We can say the incentives got accrued during FY 2017-18 and technically speaking it Rs. 1,00,000 should form part of your salary in the year 2017-18. But since it is subject to approval from the board we can also say it is not confirmed. 
6. But irrespective of the situation, relief u/s 89(1) cannot be claimed for salary incentive. 
Please correct me if the above interpretation has an alternative view. 

Thank you Mr. Suresh,

For the time you have spend on this matter.