2001 (9) TMI 95 - HC - Income Tax

Summary

Issues:
1. Entitlement to claim exemption in respect of house rent allowance (HRA) by a deceased-petitioner.
2. Interpretation of legal provisions regarding exemption of house rent allowance for retired High Court judges.
3. Validity and legality of the order of the Commissioner of Income-tax regarding exemption of house rent allowance.
4. Applicability of exemption provisions under the High Court judges (Conditions of Service) Act, 1954.

Analysis:
1. The deceased-petitioner, a retired Chief Justice of the Andhra Pradesh High Court, was appointed as a Member of a Commission of Enquiry and received a house rent allowance of Rs.30,000 during the relevant accounting year. The Commissioner of Income-tax found that the petitioner was not entitled to claim exemption for this allowance and issued a show-cause notice under section 263 of the Income-tax Act.
2. The contention raised on behalf of the petitioner was that since he held a post that could only be filled by sitting or retired High Court judges, he should be considered as a High Court judge entitled to the same benefits. However, the Commissioner rejected this argument, stating that the petitioner could not be considered a sitting High Court judge and therefore not eligible for the exemption under the Income-tax Act.
3. The High Court noted that the Income-tax Act does not provide an exemption for house rent allowance payable to High Court judges, but the High Court judges (Conditions of Service) Act, 1954, exempts such allowances for sitting judges. The definition of "judge" under the Act explicitly includes sitting judges, not retired ones, leading to the conclusion that retired judges cannot claim the same exemption.
4. It was clarified that a retired Chief Justice or judge of a High Court, when appointed by the government for any post, does not regain the status of a sitting judge and therefore cannot claim exemption under the High Court judges (Conditions of Service) Act, 1954. The State Government is also not authorized to grant tax exemptions for house rent allowances to its appointees. Consequently, the Commissioner's decision to disallow the exemption was deemed appropriate and the writ petition was dismissed.

In conclusion, the judgment upheld the decision of the Commissioner of Income-tax, emphasizing that retired judges cannot claim the same exemptions as sitting judges under the relevant legal provisions.