Applicability of Sec.10(14) to allowance unspent. - Income Tax - 1407/CBDT

INSTRUCTION NO. 1407/CBDT Dated: July 21, 1981 Section 10(14) of the I.T. Act, 1961 exempts any special allowance or benefit not being in the nature of entertainment allowance or other perquisites within the meaning of sec.17(2) specifically granted to meet the expenses wholly necessarily and exclusively incurred in the performance of the duties of an office or employment of profit to the extent to which such expenses are actually incurred for that purpose. Daily allowance given to employees of the Central and state government go abroad on official duty the allowances granted to them are exempt from tax in terms of sec.10(7) provided the employee is a citizen of INDIA. The requirement of its having been spent actually which is present in sec.10(14) is absent in sec 10(7). In the case of allowances given by all other employers to their employees whether for official tours in India or abroad the relevant provision is sec.10'14 and such allowances are exempt only to the extent the expenses are actually incurred in the performance of duties. 2. Instances have been brought to the notice of the board where a part of the foreign exchange allowed to certain executives as daily allowance for tours abroad was brought back to India as the amount saved. To the extent the allowance was brought back to India unspent, the allowance was net wholly spent within the meaning of sec.10'14 and the saving thereof would not qualify for exemption from Income-tax in the hands of such employees. 3. In view of the position brought out above, the board desires that in the case of an employee other than that of the central/state government who has received daily allowance for tour abroad the ITO should go into the question.