1983 (9) TMI 104 - AT - Income Tax

Issues Involved:
1. Taxability of the salary received by a High Court Judge.
2. Deduction under Section 16(i) of the Income-tax Act, 1961.
3. Binding nature of CBDT circulars and instructions.

Detailed Analysis:

1. Taxability of the Salary Received by a High Court Judge:
The assessee, a sitting Judge of the Hon'ble High Court of Allahabad, contended that the salary received as a Judge should not be taxable under the Income-tax Act, 1961. The Income Tax Officer (ITO) did not accept this plea and taxed the salary after allowing a deduction of Rs. 1,000 under section 16(i) of the Act. The Commissioner (Appeals) also did not accept the plea that the salary received by the assessee as a Judge was not taxable, thereby upholding the ITO's decision.

2. Deduction under Section 16(i) of the Income-tax Act, 1961:
The primary contention of the assessee was that the deduction under section 16(i) should not be limited to Rs. 1,000. The Commissioner (Appeals) found that the assessee received a conveyance allowance of Rs. 300 per month under section 22B of the High Court Judges (Conditions of Service) Act, 1954. The Commissioner (Appeals) held that since the conveyance allowance was not brought to tax by the ITO, it was presumed to be granted to meet expenses wholly, necessarily, and exclusively incurred in the performance of duties, falling under section 10(14) of the Act. Consequently, the Commissioner (Appeals) directed that the assessee should be allowed a deduction of Rs. 2,213 instead of Rs. 1,000.

The department argued that the deduction should be limited to Rs. 1,000 as per the proviso to section 16(i). However, the assessee contended that the conveyance allowance granted to a Judge related wholly and exclusively to the performance of duties, and thus, the standard deduction should not be limited to Rs. 1,000.

3. Binding Nature of CBDT Circulars and Instructions:
The Tribunal referred to Instruction No. 1088 and Circular No. 196, which clarified that the conveyance allowance paid to a High Court Judge falls within the purview of section 10(14) and should be treated as reimbursement of expenses wholly, necessarily, and exclusively incurred in the performance of duties. Consequently, the standard deduction should not be restricted to Rs. 1,000. The Tribunal also quoted a letter from the CBDT to FICCI, which reinforced that standard deduction should not be restricted in cases where expenses are reimbursed.

The Tribunal addressed the controversy regarding the binding nature of CBDT circulars and instructions, citing several Supreme Court and High Court judgments. The Tribunal concluded that if a circular or instruction provides administrative relief to the taxpayer, it is binding on the income-tax authorities and enforceable by the courts. Conversely, if it imposes a burden on the taxpayer, it loses its binding nature.

Conclusion:
The Tribunal dismissed the department's appeal, upholding the Commissioner (Appeals)'s decision that the assessee was entitled to a full deduction of Rs. 2,213 under section 16(i) and not limited to Rs. 1,000. The Tribunal affirmed that the CBDT instructions and circulars, providing administrative relief, were binding on the income-tax authorities.

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