1993 (7) TMI 136 - AT - Income Tax

Summary

Issues:
- Reopening of assessments under section 154 of the IT Act, 1961
- Taxability of additional conveyance allowance and incentive bonus
- Rectification of Tribunal's order under section 254(2) of the Act
- Refusal by IT Authorities to modify reassessment orders
- Exemption under section 10(14) of the Act for conveyance allowance

Analysis:
The judgment by the Appellate Tribunal ITAT Jaipur dealt with multiple appeals arising from orders passed under section 154 of the IT Act, 1961, all involving the same question and facts, which were disposed of by a common order. The assessee, employed by Life Insurance Corporation of India as a Development Officer, received additional conveyance allowances over several years, which were claimed as exempt. Assessments for these years were completed under section 143(1) of the Act. The Tribunal had previously ruled on the taxability of additional conveyance allowance and incentive bonus for a specific assessment year, clarifying that the conveyance allowance was fully exempt under section 10(14) of the Act, while the incentive bonus was not. Subsequently, the Income Tax Officer (ITO) reopened assessments for all years and taxed the conveyance allowance amounts. The assessee sought rectification of the Tribunal's order, which was granted, but the IT Authorities refused to modify the reassessment orders based on the Tribunal's decision.

The Tribunal found that the order from the previous Tribunal ruling clearly stated that the additional conveyance allowance was to be fully exempt under section 10(14) of the Act, and there was no basis for withdrawing this allowance. The Tribunal had also withdrawn its decision on the taxability of the incentive bonus in a subsequent order. The reassessment orders contained mistakes apparent from the record, which were rectifiable under section 154 of the Act. The ITO erred in holding that the mistakes were not rectifiable. The Tribunal consistently held that conveyance allowances specifically granted for necessary expenses related to duties were exempt under section 10(14) of the Act, following a Special Bench decision in a related case. As a result, all appeals were allowed, and the Deputy Commissioner's order was canceled.