787/CBDT. - Income Tax - 787/CBDT

INSTRUCTION NO. 787/CBDT Dated : November 11, 1974 Section(s) Referred: 10(14) Statute: Income - Tax Act, 1961 Attention is invited to Board's Instruction No.642 (F.No.279/139/73-ITJ) dated 4th January, 1974 (printed below) on the above subject issued after the receipt of adverse decision of the IT Appellate Tribunal on the above point. The decision of the Bombay Bench of the Tribunal was taken up by way of a reference under section 256(1) to the High Court. This reference to the High Court has now been answered against the Department and in favour of the assessee. The Bombay High Court has held that the city Compensatory Allowance was exempt under section 10(14) of the Income-tax Act. 2. On receipt of the judgment, the matter has been reconsidered in detail and the Board are advised that the issue should be taken by way of an appeal to the Supreme Court. Accordingly, the CIT Bombay City has been advised to file a petition for leave to appeal to the Supreme Court under section 261 of the IT Act, 1961. He has also been advised to seek the stay of the operation of the judgment even within to the jurisdiction of the Bombay High Court during the pendency of the leave petition and if this is admitted till the matter is disposed of by the Supreme Court. 3. It is, therefore, desire, that all Charges except the Bombay City Charges, Poona and Vidarbha and Marathwada Charges will continue to follow Board's Instruction No.642 dated 4th January, 1974 and regulate all proceedings involving this issue accordingly. They will file appeals/references against all adverse orders irrespective of the tax effect in each case. In so far as the Bombay City and Vidarbha and Marathwada Charges are concerned, which are under the jurisdiction of the Bombay High Court, request should be made to the AACs and IT Appellate Tribunal for keeping in abeyance appeals pending before them involving the same issue till the matter is ultimately settled. In the interregnum, if any adverse orders have already been passed, protective appeals/reference applications should also be filed to keep the issue alive and the Tribunal should also be requested to keep pending all reference applications as may have been filed till the matter is ultimately settled as otherwise these are liable to be dismissed on the short ground of the judgment in Shri D.R.Phatak's case being binding on the IT Appellate Tribunal as well as the Department.