2018 (11) TMI 552 - AT - Income Tax

Deduction u/s 10(14) denied - assessee has received fixed conveyance allowance and conveyance expenses - AO is of the opinion that the assessee is failed to prove the conditions laid down in section 10(14), therefore, the claim of the assessee is disallowed - Held that - Unless a case has been initiated against an employee by an employer, the said presumption that the employee has incurred the expenditure for which it is granted, will apply and it will not be necessary for the employees to submit accounts every month to the employer and along with return to the assessing authority. If, in such matters, filing of the accounts and vouchers/receipts are insisted upon to claim exemption under section 10(14) of the Act by the Income-tax authorities, it will lead to voidable waste of time and expenditure and would serve no useful purpose but on the contrary it would be counter-productive. We are of the opinion that the exemption claimed by the assessee has to be allowed.

Summary

Issues involved: Appeal against orders of Commissioner of Income Tax, disallowance of exemption claimed under section 10(14) of the Income Tax Act, 1961 for fixed conveyance allowance and conveyance expenses.

Detailed Analysis:

1. Facts and Assessment: The assessee, a Development Officer in LIC of India, filed a return of income declaring total income. The Assessing Officer issued a notice under section 148 for an escapement of income related to deduction claimed by the assessee for fixed conveyance allowance and conveyance expenses under section 10(14) of the Act. The Assessing Officer disallowed the exemption claimed by the assessee, citing failure to establish fulfillment of conditions under section 10(14).

2. Appeal before CIT(A): The CIT(A) confirmed the Assessing Officer's order, stating that the assessee failed to prove that the allowances received were incurred for the purpose they were received.

3. Tribunal Proceedings: The assessee appealed before the Tribunal, arguing that the issue was covered by a previous tribunal decision and that the case-law relied on by the Assessing Officer was not applicable to the present case.

4. Tribunal Decision: The Tribunal considered the arguments and the relevant legal provisions. It referred to a decision of the Jurisdictional High Court stating that where employers grant allowances for specific purposes, it is presumed that the entire expenditure has been incurred for that purpose. The Tribunal held that the exemption claimed by the assessee should be allowed based on this legal principle. The Tribunal set aside the CIT(A)'s order and allowed the appeal filed by the assessee.

5. Second Appeal: A second appeal with similar facts was also allowed by the Tribunal, applying the decision made in the first appeal.

6. Final Decision: Both appeals filed by the assessee were allowed, and the orders disallowing the exemption claimed under section 10(14) were set aside, based on the legal principles established by the Jurisdictional High Court and the Tribunal's interpretation of the same.

In conclusion, the Tribunal allowed the appeals, emphasizing the legal presumption that when employers grant allowances for specific purposes, it is presumed that the entire expenditure has been incurred for that purpose. This presumption was crucial in allowing the exemption claimed by the assessee for fixed conveyance allowance and conveyance expenses under section 10(14) of the Income Tax Act, 1961.