1992 (7) TMI 138 - AT - Income Tax

Summary

Issues:
1. Taxability of coal field allowance received by the assessee.
2. Authority of Central Government to issue rules overriding judicial decisions.
3. Interpretation of Section 10(14) of the Income-tax Act regarding special allowances.

Analysis:

1. The appeal was filed by the assessee against the order of the Id. DC (A) regarding the tax treatment of the coal field allowance received during the year. The Assessing Officer allowed only Rs. 1,200 as non-taxable, contrary to the assessee's claim of 50% being non-taxable based on ITAT decisions. The Assessing Officer rejected a petition for rectification citing a CBDT circular overriding ITAT decisions. The assessee argued that CBDT cannot overrule judicial decisions, but the DC (A) disagreed. The counsel for the assessee contended that the Central Government cannot issue directives interfering with appellate authorities' jurisdiction. The DR supported the Assessing Officer's decision based on the CBDT circular. The Tribunal noted the dispute and ruled in favor of the assessee, accepting the claim of 50% deduction from taxable income based on previous ITAT decisions.

2. The debate centered on the authority of the Central Government to issue rules that contradict judicial decisions. The counsel for the assessee argued that the Central Government cannot make rules overriding judicial decisions, while the DR supported the Assessing Officer's decision based on the CBDT circular. The Tribunal opined that the Central Government can determine the quantum of non-taxable allowances through notifications. The Tribunal found the circular restricting the deduction to Rs. 100 contrary to the notification, thereby ruling in favor of the assessee's claim based on previous ITAT decisions.

3. The Tribunal delved into the interpretation of Section 10(14) of the Income-tax Act concerning special allowances. The section was amended for the assessment year in question, granting the Central Government the power to specify non-taxable allowances by notification. The Tribunal referred to a specific notification by the Central Government regarding allowances for expenses incurred in the performance of office duties. The Tribunal analyzed the nature of the coal field allowance and its historical context, ultimately accepting the assessee's claim for a 50% deduction from taxable income based on previous ITAT decisions. The appeal was dismissed in favor of the assessee.