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TMI Blog2005 (1) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the employee really qualifies for the exemption to ensure that a certificate to this effect is issued in favour of the employee based on which not only the employee can claim the benefit, but also the employer is relieved of his obligation for deduction of tax at source. A circular of this nature can never be said to be to the detriment of the petitioners – petition dismissed - - - - - Dated:- 17-1-2005 - Judge(s) : D. V. SHYLENDRA KUMAR. JUDGMENT D.V. Shylendra Kumar J.- The petitioners are all employees of the Life Insurance Corporation of India (for short "the LIC") and are working as Development Officers in the various branches of the Corporation. In these petitions, the petitioners have sought for quashing of a circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel submits that the Corporation is clearly under a mandate and directions not to deduct any tax at source in respect of payment made to the petitioners as conveyance allowance and additional conveyance allowance and if so, the circular at annexure B dated April 24, 2004, is clearly one not warranted in law. It is for such purpose learned counsel prays that the circular is to be quashed and the first respondent be restrained from effecting any deductions at source in respect of payments made to the petitioners and from remitting the amount to the Income-tax Department, etc. A perusal of the circular at annexure B indicates that the Corporation which is quite aware of the provisions of section 10(14) of the Act and also the judgment ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he very provision indicates that exemption is applicable only to the extent of the amount paid which is for an actual expenditure incurred for a specific purpose and not any amount over and above. The circular indicates that there is divergence of opinion among different High Courts on the aspect of deduction of tax at source in respect of payment by the employer qualifying for exemption under section 10(14) of the Act and more over the past experience of the corporation itself was that the corporation had been subjected to levy of interest and penalty for not deducting tax at source in respect of conveyance allowance and additional conveyance allowance to its employees, as the employees, viz., the Development Officers, had not availed of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption, the present circular appears to have been issued. The circular dated April 24, 2004, in fact, as its contents indicate that the Corporation is quite aware of the decisions of various courts on this aspect of the matter, including the decision of the Rajasthan High Court in the case of Shivraj Bhatia v. Life Insurance Corporation of India [2003] 260 ITR 41. The exemption of the nature referred to in clause (14) of section 10 of the Act will enure to the benefit of the assessee, who is an employee only on such employee claiming such exemption and on satisfying the conditions mentioned therein and not by mere non-deduction of tax at source by the employer. The deduction of tax at source is a provisional deduction or advance payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the Development Officer concerned is not issued, in proof of such expenditure and while tax is deducted at source in such cases, the Development Officers concerned are notified that they can claim exemption by filing returns of their income and place the material before the authority concerned. The object of such a circular on the face of it appears to be that if the employee really qualifies for the exemption to ensure that a certificate to this effect is issued in favour of the employee based on which not only the employee can claim the benefit, but also the employer is relieved of his obligation for deduction of tax at source. A circular of this nature can never be said to be to the detriment of the petitioners. If at all it only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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