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TMI Blog2003 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... C development officers. - Exemption on additional conveyance allowance has to be considered with reference to the proved facts of each assessee (LIC development officer) and therefore the issue cannot be decided by this court - - - - - Dated:- 8-4-2003 - Judge(s) : C. N. RAMACHANDRAN NAIR. JUDGMENT C. N. RAMACHANDRAN NAIR J. -All these original petitions are filed by the associations representing the LIC Development Officers challenging the periodical circulars issued by the Executive Director (Marketing) of the LIC of India providing guidelines for deduction of income-tax at source on "additional conveyance allowance" paid to the LIC Development Officers. O. P. No. 7547 of 1990 was filed in the year 1990 challenging exhibit PI circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxes. Standing counsel for the Income-tax Department on the other hand contended that additional conveyance allowance forms part of salary and deductions have to be made towards income-tax at source after providing G for exemption in terms of section 10(14) of the Income-tax Act, read with rule 2BB of the Income-tax Rules, prescribed thereunder. I have gone through the circulars or instructions issued by the Executive Director of the LIC providing guidelines for deduction of income-tax at source in a limited way mainly based on performance of the officers concerned. Even though the LIC has stated that they have taken instructions from the Central Board of Direct Taxes, no circular/proceeding is seen issued by the Central Board of Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (1) For the purposes of sub-clause (i) of clause (14) of section 10, prescribed allowances, by whatever name called, shall be the following, namely: - (a) any allowance granted to meet the cost of travel on tour or on transfer ; (b) any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty; (c) any allowance granted to meet the expenditure incurred or conveyance in performance of duties of an office or employment of profit: Provided that free conveyance is not provided by the employer. (d) any allowance granted to meet the expenditure incurred on a helper where such helper is enga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployee and reimbursement by the employer. The position therefore is that actual expenditure incurred by the employee and reimbursed by the employer on being satisfied that the expenditure is incurred towards conveyance in the performance of duty of office shall not attract income-tax. It is conceded that the LIC Development Officers are entitled to certain conveyance allowance and besides this, they are also entitled to additional conveyance allowance. The claim of exemption raised in the O. Ps. does not pertain to conveyance allowance paid to the Development Officers, but is limited to the eligibility for exemption of "additional conveyance allowance". Exemption is available to the additional conveyance allowance in terms of section 10(14) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, it was held, the assessee must satisfy two tests namely, that they are expenses wholly and necessarily incurred in the performance of the duties of the office, and, secondly, the expenses incurred by the assessee were for the discharge of his duties under the conditions of service with the employer. I do not think section 10(14), read with rule 2BB(1)(c) is capable of different meaning than what is assigned to it by the Bombay High Court in the said decision. However, I do not think that this court should examine the correctness or propriety of the two impugned circulars issued by the Executive Director of the LIC who is stated to have issued the same after consulting tax experts, and the Central Board of Direct Taxes. These circulars o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every LIC Development Officer to approach the Assessing Officer with an application under section 197 and demonstrate that the additional conveyance allowance is exempt fully or partly and on being satisfied the Assessing Officer has to necessarily issue the certificate. On the other hand, if deduction is made, it is for the assessee to claim exemption in the assessment by filing returns and claim refund of tax wherein also the Assessing Officer will consider the eligibility for exemption in the assessment, and if the assessee is aggrieved, he is free to file appeal before the appellate authority and get the matter settled. It is therefore either for the LIC to take up the matter before the Central Board of Direct Taxes for appropriate cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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