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TMI Blog1997 (4) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the assessee filed return of income at Rs. 1,24,280 and the same was processed under section 143(1)(a). The case was selected for scrutiny and notice under section 143(2) was issued. 2.1 The Assessing Officer noted that the assessees sources of income were from salary from Indian Airlines, dividend and interest, as also loss declared from house property. The Assessing Officer further noted that the assessee had received allowances from the employer Indian Airlines (IAC), but the same had not been declared in the return of income, namely:--- STA Rs. 20,940 ASTA Rs. 15,225 LR Rs. 5,076 Entt. All. Rs. 5,076 MA/DR Rs. 23,484 SOA Rs. 1,478 MA/MS Rs. 10,880 2 Crew All. Rs. 8,010 ------------------ Total: Rs. 90,169 ------------------ The Assessing Officer further noted that the assessee had claimed exemption in respect of the above allowances under section 10(14) of the IT Act. The Assessing Officer examined the provisions of section 10(14) and observed that the claim for exemption by pilots and other crew members of the Airlines--whether of public or private sectors--is regulated under the provisions of section 10(14)(ii). He also referred to the Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He also contended that otherwise IAC would have included such allowances in the taxable salary and deducted tax at source. He also contended that the Notification relied upon by the Assessing Officer was not relevant and in fact, the aforesaid allowances should be treated as fully exempt under section 10(14)(i), because the assessee had actually spent the said amounts for the purpose for which they had been given. He also contended that if two interpretations of any provision were possible, the interpretation beneficial to the assessee must prevail. 3.1 The ld. CIT (Appeals) considered the submissions and observed that the amendment made by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1-4-1989 ushered in complete change in the scenario of such special allowances as laid down in section 10(14) of the IT Act. The ld. CIT (Appeals) then examined the legislative history of the provisions of section 10(14), right from the stage of section 4(3)(vi) of the Indian Income-tax Act, 1922, and observed that the language of section 10(14) clearly shows that any special allowance or benefit specifically granted to meet 'expenses wholly, necessarily and exclusively incurred in the perform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reins in its hand to notify the exemptions in respect of both sub-clauses (i) and (ii) of clause (14) of section 10. He, therefore, concluded that the legislative history shows that the areas of exemptions available to various segments have been specified by the Central Government by way of specific notifications issued under those provisions. The ld. CIT (Appeals) further referred to Notification Nos. SO 143(E) and SO 144(E) dated21-2-1989and further amendments made in Notification No. SO 144(E). He further referred to serial No. 4 of Notification No. SO 144(E) and held that the employees of the IAC are working in a transport system and that they will be covered within the mischief of provisions 10(14)(ii) read with the said notification No. SO 144(E) dated21-2-1989, as the employees of the transport system and clearly mentioned in item 4 of that Notification. He also observed that "It is well settled that in a taxing Act, one has to look merely at what is clearly said. There is no room for intendment. Nothing is to be read in and nothing is to be implied V.M. Dakshinamoorthy Mudaliar v. TRO [1993] 202 ITR 946 (Mad.) the underlying principle is that the meaning and intention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, 1961 and that they would be exempt to the extent the expenses are actually incurred by the recipients. It is further mentioned in the said note that light refreshment allowance is by way of reimbursement to meet the cost of refreshments at the Airport. Similarly, it is mentioned that the crew members have to go to various places and are required to stay there and that meal allowances are given to meet the expenses required to be incurred by the crew members on meals during stay away from the normal place of posting. It is also mentioned that a Stay Over allowance is paid to the crew members to meet pocket expenses other than on meals during their stay away from the place of normal place of duty. With reference to entertainment allowance it is mentioned that the same is paid to senior pilots to reimburse the cost of official entertainment, while on tour. Similarly, two crew allowance is included in allowance and that the IAC has already paid the requisite tax, alongwith interest under section 201(1A) on this allowance. 4.1 The ld. counsel then referred to the provisions of section 10(14), as they stood before 1-4-1989 and stated that the aforesaid allowances have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by section 10(14) and that the excess of Rs. 100 per month should be subjected to tax. The Board also held that the amount of premia reimbursed in respect of insurance against loss of licence fell within section 17(2) and should be subjected to tax as perquisite. The Board also clarified that the house rent allowance and certain other allowances such as telephone allowance, transport/conveyance allowance, free and concessional passage, medical fees need not be subjected to tax. He further referred to the clarification issued on24-7-1976in relation to instruction 778 (pages 5-7 of the paper book), wherein it was clarified that kit maintenance allowance is covered by section 10(14) and the same would be exempt. He further referred to instruction 1107 dated5-10-1977(pages 8-9 of the paper book), wherein the Board has clarified that special travelling allowance was covered within the scope of section 10(14) and the same would be exempt to the extent it is actually incurred by the employee. The ld. counsel further invited our attention to Notification No. SO 143(E) dated 21-2-1989 issued under section 10(14)(i) and submitted that clause (b) of that Notification was relevant, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lots/crew members with reference to place of posting/residence, but are paid to meet expenses during the performance of their duties outside the place of posting/residence. He, therefore, submitted that the quality and character of expenses is not changed because of engrafting old Explanation as new sub-clause (ii) in clause (14) and that the expenses still remain as expenses incurred wholly, necessarily and exclusively in the performance of duties. The ld. counsel further added that the Deptt. is actually under a state of utter confusion. In this connection, he invited our attention to page 56 of the paper book where a copy of authorisation memorandum dated16-5-1996is placed. In the said memorandum, the ld. CIT has directed the ld. DCIT Range (TDS)-31/ACIT Cir. (TDS)-31 (1) Mumbai to file an appeal to the Income-tax Appellate Tribunal, Mumbai Benches against the order of CIT(A)-IX dated 12-3-1996. In ground No. 3 mentioned in the said authorisation memorandum, it is mentioned that "On the facts and circumstances of the case, the learned CIT(Appeals) erred in holding that Stay Over Allowance, travelling allowance, special travelling allowance, meal allowance, light refreshment allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are already covered by Notification No. SO 143(E) dated21-2-1989. It is further mentioned that in-flight meal allowance and entertainment allowance to flight crew are also covered by Notification No. SO 144(E) dated21-2-1989, serial No. 4. It is also mentioned that initial navigation allowance, flying allowance, and lecture allowance are in the nature of special pay and the same are beyond the purview of section 10(14). It is also mentioned that the Board is considering the kit maintenance allowance for the purpose of section 10(14)(i). The ld. counsel urged that the employees of the IAC ought to be given the same treatment as the employees of the Air India and that the government cannot give separate treatment to the same type of allowances in relation to two Organisations. The ld. counsel further referred to CBDT circular No. 701 dated23-3-1995. In paragraph 3 of the said circular it has been clarified that consequent to the amendment of section 10(14) by the Direct Tax Laws (Amendment) Act, 1987 (w.e.f.1-4-1989), all circulars, instructions and clarifications issued by the Board regarding section 10(14) upto31-3-1989ceased to have effect from the assessment year 1989-90 and onwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one place to another place. He further submitted that the tax authorities have rightly allowed exemption only upto the limit of Rs. 30,000 in view of the said provisions of Notification No. SO 144(E). 5.1 The ld. counsel in his reply referred to the provisions of section 10(14)(i) and submitted that the allowances, which are not in the nature of perquisites, have been specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of duties. He further submitted that the duties being performed by pilots/crew members are duties of a special nature. He also submitted that the IAC was only meeting the room charges in respect of a hotel and that the other charges were being not by the employees out of the allowances paid by IAC. 6. We have carefully considered the rival submissions on the issue involved in this appeal. We have also carefully perused the orders of the tax authorities and other relevant material to which our attention has been invited during the course of hearing. We have also seen the case law relied upon by the ld. counsel. It is observed that the main thrust of the arguments of the ld. counsel has been that there is no basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the provisions re-enacted continue in force and be deemed to have been made or issued under the provisions so re-enacted. It is observed that in the present case there has been a basic change in the provisions of section 10(14), as re-enacted, inasmuch as, the whole gamut of exemptions is now regulated by notifications made by the Central Govt. and published in the Official Gazette. The intention underlying the provisions of section 24 of that Act if applied to the instructions/circulars in question is, therefore, also of no help to the assessee. The two relevant notifications which have been issued under section 10(14) amended are SO 143(E) and SO 144(E) dated21-2-1989. 6.1 The next contention of the ld. counsel in this behalf is that the allowances are granted specifically to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of office and are covered by the provisions of section 10(14)(i). In this connection, he referred to clause (b) of Notification No. SO143(E), dated21-2-1989. It is observed that clause (b) of the said notification deals with allowances, whether granted on tour(emphasis supplied) or for the period of journey in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The thrust of exemption covered by sub-clause (ii) is, therefore, in relation to allowances granted to meet personal expenses generally incurred at the place of posting where duties are ordinarily performed or the place where an assessee ordinarily resides, or to compensate him for increased cost of living as are notified by the Central Government. It is further observed that the only relevant notification issued by the Central Government under sub-clause (ii) is SO144(E) dated21-2-1989. In the preamble to the said notification it has been clearly stated that the allowances mentioned in Col. 2 of the Table to the said notification granted to an assessee to meet his personal expenses and to compensate him for the increased cost of living at the places mentioned in the corresponding entry in Col. 3 and the maximum amount of such allowances mentioned in the corresponding entry in Col. (4) of the said Table are specified for the purposes of sub-clause (ii) of clause (14) of section 10. We have carefully gone through the said notification and it is observed that only item 4 of the said notification is relevant to the cases under consideration whereunder allowances granted to an emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BDT letter dated 30-3-1990, we feel that the remedy lies elsewhere and not with the Tribunal. 6.4 The next question is as to whether the scope of the exemptions specified in sub-clauses (i) and (ii) of clause (14) of section 10 is circumscribed by the notifications issued by the Central Government or the Tribunal can go into the objects underlying those provisions and try to supplement those provisions and the notifications issued under clause (14). We feel that keeping in view the present provisions of the Income-tax Act and of the Constitutional law, it is not possible for the Tribunal to play a Legislative role and supplement the provisions of section 10(14) or the notifications issued thereunder. As already observed in the earlier part of this order, the whole gamut of granting exemptions is now regulated under section 10(14) by notifications issued by the Central Govt. by virtue of powers granted to it by the Legislature. In the circumstances, the Tribunal can at best interpret the existing provisions as laid down by the Legislature and further circumscribed by the Executive under powers delegated to it. We may refer, in this connection, to the decision of the Hon'ble Orissa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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