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TMI Blog2018 (10) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... ravel within the city and also undertake journey outside city periodically. Given these impediments, the analogy which the DCIT appears to have drawn by comparing the chart, which referred to Section 10(14)(ii) of the Act, and granting relief limited to the extent the chart indicated, was not appropriate. In this regard this Court is of the opinion that the decision of the employer to grant the allowance either on actual reimbursement after verifying it or spare itself the added responsibility of verifying it but based upon observing a general pattern give a lump-sum allowance, which either covers it fully or in part leaving the rest to be reimbursed, if a higher amount was incurred, was a business or commercial decision. The stereotypical approach adopted by the DCIT was clearly not warranted. What the Central Government or the State Government might permit their employees or officers under the employment or having authority of law cannot blindly be applied to other organisations – even to the Public Sector Units which are expected to be organised on commercial pattern and have entire different objectives. The petitioners are entitled to succeed. The respondents, DCIT a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the side of the deductor co. Since the ddductor organisation has not deducted the taxes on the above four items and has allowed exemption in contravention of section 10(14) (i) as such the deductor corporation is liable for additional tax on the above. During the course of proceedings, the attention of the representatives was also invited towards instructions of CBDT clarificatory letter vide F.No.149/25/96-TPL dated 12.03.97 and various other judgments from varbus courts, which clarly lay that these allowances and perquisites are taxable in the hands of the employees. Not only this, the discussion about the decisions of the various courts were also made that these allowances are taxble and the cooperation much deduct taxes on such allowances. Since the corporation has committed a default by not deducting such taxes as such the additional tax is levibale on such deduction. 3. It appears that the LIC carried the matter unsuccessfully in appeal to the higher authorities. In the meanwhile, the individuals, whose allowances and amounts paid to them were subjected to TDS, approached this Court through these writ petitions complaining that having regard to the wording of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements to the Branch Office. 6. The petitioners have also placed on record a circular issued by the LIC to all its Zonal Managers and Officers with respect to the allowances payable to the Development Officers indicating in a tabular manner the specific amounts payable in different areas. The learned counsel for the petitioners relied upon the certificate issued by the LIC, to the individual petitioners. The said certificate, inter-alia, states as follows: (D) The following amounts were paid to the employee to meet the expenses wholly, necessarily and exclusively incurred in the performance of the development duty and have been actually incurred wholly for that purpose, as such, they are exempt from Income Tax U/s 10(14) of Income tax Act and, therefore, no tax has been deducted at source. i) (a) Conveyance Allowance : Rs.19643- (b) Additional Conveyance allowance : Rs.59847- (ii) 80% Vehicle Insurance Premium : ₹ 2241- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment are not to be treated as income. The provision states as follows: 10(14) (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; (ii) any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, [as may be prescribed and to the extent as may be prescribed]. [Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption in respect of disturbed area allowance referred to at serial number 2. 11. In this case the DCIT specifically referred to Section 10(14)(i) of the Act and was of the opinion that the provision was not complied with. The order as is evident from the relevant extract, nowhere discusses how the reimbursement of expenses towards conveyance allowance and additional conveyance allowance having regard to the incidence of travelling to be undertaken by the Development Officers, all of whom are before this Court, had to be treated as income. The submissions of the Revenue, in the course of the present proceedings, were premised upon application of Section 10(14)(ii) of the Act. That provision spells out the chart which lists exhaustively the kind of allowances applicable in case the concerned provision of Section 10(14)(ii) of the Act is involved. This Court is, therefore, of the opinion that as to whether a particular kind of expenditure is necessary and is exclusively incurred or to be incurred in the function intimately connected with the employment requires to be inquired into especially in the context of commercial organisations like the LIC. The Development Officers ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he general formula having a reference to the parameters of the business and, thus, the payment of additional conveyance allowance is a reimbursement for actual expenditure incurred by the Development Officers on account of conveyance in relation to performance of their duties and the said expenditure has a direct nexus with the performance of duties for development of the insurance business by way of meeting several people and to enrol new life insurance agents and to meet the insurance persons for encouraging them to take insurance policies. Naturally, in such circumstances, touring expenses are incurred on conveyance. Such conveyance expenses are reimbursed by the employer as per the prescribed norms in the name of additional conveyance allowance. The certificate is given by the LIC-employer of the minimum amount which the Life Insurance Corporation certifies that it is the amount actually spent by the Development Officers in the performance of their duties. The ultimate liability of claiming exemption and proving the same is on the employee-assessee (Development Officers). The exemption limit is restricted by the instructions issued by the Central Board of Direct Taxes from time ..... X X X X Extracts X X X X X X X X Extracts X X X X
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