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TMI Blog2005 (10) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed as deduction from the conveyance allowance of Rs. 2,13,016 paid. LIC replied that the same was based on earlier year s assessment order. The Assessing Officer thereafter concluded that since the assessee has not produced any documentary evidence regarding allowability of conveyance allowance or furnished any proof like log books, bills, vouchers etc., the amount cannot be said to have been actually spent by assessee. Thus, exemption under section 10(14) was denied. Learned CIT(A), while dismissing the appeal held as under : "In this connection, the appellant has maintained a notebook wherein it is recorded items of expenditure relating to taxi charges. The evidence in the form of a note book which has been filed as evidence makes interesting reading. The note book lists a date-wise itemized list of taxi charges, petrol for a motorcar, petrol for a scooter and moped. Against the dates varying amounts have been debited. As is expected, the total amount recorded is a sum of Rs. 2,39,504 against the claim of Rs. 2,13,016. But following upon the ratio of the Rajasthan High Court decision supra , it was necessary to determine whether this "record of expenditure" was actually i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,631 as deduction and has deducted tax on the balance amount of Rs. 1,48,385. By treating the amount of Rs. 1,48,385 as a part of the salary was not the Branch Manager not acknowledging the fact that this amount was spent wholly and exclusively in the course of the appellant duties. Thus, even the salary certificate issued by the LIC in Form 16 certifies that the appellant did not spend the entire amount of additional conveyance allowance on his duties. The appellant and his ITP, while relying on the decision of the Rajasthan High Court, has interestingly maintained silence on the crucial fact that the case of Shivraj Bhatia, Development Officer, pertained to assessment year 1986-87, whereas the appellant s case is for 2001-02. Section 10(14) now read with Rule 2BB specifies that conveyance allowance would be exempt to the amount used for the purpose. From the "evidence" produced it is held that this amount was not used for the purpose it was granted. Therefore, the appellant is not entitled to the said deduction. Following upon the judgment of the Rajasthan High Court that it was necessary for the income-tax authorities to determine whether the amount of additional conveyance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation obtained on the back of the assessee for being used against him, cannot be a good evidence and the assessment concluded on the basis of such information cannot withstand the test of law, as being opposed to principles of natural justice. Hence, needs to be set aside. He also relied upon the decisions in the case of Life Insurance Corpn. of India v. Union of India [2003] 260 ITR 41 and CIT v. A.K. Ghosh [2003] 263 ITR 536. In the end, he submitted that when the amount is received to meet the expenses and which are prescribed in Rule 2BB and since the amount has been spent in performance of duties, the exemption under section 10(14) should be granted. 2.2 Learned DR on the other hand strongly relied upon the appellate order. He submitted that exemption under section 10(14) is allowable provided the Assessing Officer is satisfied that the expenses are incurred necessarily and exclusively in performance of duties and the same are actually incurred for that purpose. There is no evidence to indicate that conveyance allowance was spent for the performance of developing the business or procuring new business for LIC. The amount spent on employing two assistants cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him, duly countersigned. Thus, became eligible for additional conveyance allowance. It is to be noted that the credibility of the certificate dated 29-3-2001 issued by the Branch Manager cannot be undermined to disallow the actual expenditure incurred by the assessee wholly, entirely and exclusively in the performance of duties. 3.1 Section 10(14)( i ) provides thus : ( i )any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause ( 2 ) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, (as may be prescribed) to the extent to which such expenses are actually incurred for that purpose : Reading the aforesaid section, it is clear that to claim exemption under section 10(14) ( a )The amount should be specifically granted to meet the expenses wholly, necessarily and exclusively in the performance of the duties. ( b )Such special allowance should be prescribed. Rule 2BB is prescribed in this regard. Any allowance granted to meet the expenditure incurred on conveyance in performance of duties is prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot irrespective of his place of residence and the place of his work and also irrespective of whether he is posted in any of the 2000 offices of the LIC of India. But in the assessee s case the Additional Conveyance Allowance has been granted to compensate the actual conveyance expenditure incurred by the assessee in performing his duties as a Development Officer. Hon ble Madhya Pradesh High Court in the case of A.K. Ghosh ( supra ) held thus : "On a bare perusal of section 10(14) of the Income-tax Act, 1961, it is clear that where any special allowance or benefit which is not a perquisite is specifically granted to meet the expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment, deductions would be permissible subject to specification of the amount by the Central Government by way of notification. The emphasis is on the actual expenses incurred by the assessee. As per the instruction of the Life Insurance Corporation, Development Officers are required to travel extensively within the area allotted to them, visit various places and travelling is absolutely necessitous to carry out the obligations. The Government of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment Officers in performance of their duties. The ultimate liability to claim exemption and prove the same is on the employee-assessee (Development Officer). The exemption limit is restricted to the instructions issued by the Central Board of Direct Taxes from time to time. Therefore, Development Officers in the Life Insurance Corporation are entitled to claim exemption under section 10(14) of the Act in respect of conveyance allowance/additional conveyance allowance upon satisfying the conditions that such allowances have actually been spent for the purpose for which they were given. The Life Insurance Corporation is not liable to deduct tax at source to the extent such conveyance allowance/additional conveyance allowance is exempt under rule 2BB." In the present case, we find that the amount granted is additional conveyance, which is prescribed in rule 2BB. As per the certificate of LIC, the additional conveyance allowance was granted wholly, necessarily and exclusively in performance of duties. The assessee has produced necessary bills and evidence in support of his contention that expenses are actually incurred for that purpose. We accordingly hold that the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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