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Issues:
1. Interpretation of sections 201(1) and 201(1A) of the Income-tax Act, 1961. 2. Exemption under section 10(14) for conveyance and additional conveyance allowance. Analysis: 1. The judgment dealt with an application under section 256(2) of the Income-tax Act, 1961, regarding the cancellation of demands raised under sections 201(1) and 201(1A). The respondent, an employer, had not deducted tax at source from conveyance and additional conveyance allowances paid to employees. The Tribunal canceled the demands, stating that the corporation had its own parameters to ensure expenses were incurred, and detailed evidence was required for claims under various sections. The court found the Tribunal's decision valid, emphasizing the legal aspect of certifying expenses under section 10(14) and the Act's provisions. The court allowed the application for raising questions of law for its opinion. 2. The second issue revolved around whether conveyance and additional allowance payments could be exempt under section 10(14). The respondent argued that these payments were exempt from taxable income under section 10(14)(i). The Tribunal's decision favored the respondent, citing the corporation's parameters and the lack of legal right for detailed expenditure accounts. The court acknowledged the legal complexity of certifying these allowances under section 10(14) and the Act's rules. The court noted previous High Court decisions supporting the Revenue's stance on such payments being part of salary income subject to tax deduction at source. Consequently, the court allowed the application, directing the Tribunal to refer the questions of law for the court's opinion. This judgment highlights the legal intricacies surrounding tax deductions, exemptions, and the necessity of certifying expenses under relevant sections of the Income-tax Act, 1961. It emphasizes the importance of legal interpretations and evidence requirements for claiming exemptions, showcasing the court's role in clarifying such complex tax matters.
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