Tax on "Special Travelling Allowance". - Income Tax - 1107/CBDT

INSTRUCTION NO. 1107/CBDT Dated : October 5, 1977 Section(s) Referred: 10(14) Statute: Income - Tax Act, 1961 Reference is invited to Board's Instruction No.778* dated the 30th October, 1974 and Instruction No.985** dated the 24th July, 1976 (F.No.200/64/74-ITA(AI) on the above subject. 2. Representations were received by the Board from Air India as well as Indian Airlines against the direction of the Board to bring to tax the "Special Travelling Allowance". It has been clarified by the Air India Authorities as well as the Ministry of Tourism and Civil Aviation that the "Special Traveling Allowance" Which in the case of Air India has been renamed as "Special allowance" is nothing but a supplementary lay-over allowance and that it is granted to pilots as re-imbursement of additional expenses incurred by them in their capacity as senior members of the crew on meals, tips and other incidentals. 3. Pilots of Indian Airlines are also given an allowance which is still called "Special Travelling allowance". The purpose of the special Travelling Allowance is substantially the same as the Special Allowance which is given by Air India to its Pilots. 4. The Board have considered the representations and have decided that the allowance whether called as "Special Travelling Allowance" or "Special Allowance" comes within the scope of Section 10(14) of the Income-tax Act, 1961 and consequently to the extent to which the expenses are actually incurred by the recipients, it would be exempt. 5. While the exemption is confined to the expenses actually incurred the I.T.O. while making the assessment of any recipient of such an allowance need not be very meticulous to determine whether the allowance has actually been spent. Instead a certificate may be obtained from each employee in receipt of such allowance that the allowance in question has actually been incurred by him during the relevant previous year. If such a certificate is furnished the allowance may be exempted by the Income tax Officer unless he has reasons to believe that the certificate is not true. 6. The instructions indicated above should be applied in all pending and future assessments. assessments already completed need not be re-opened/rectified for this purpose.