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TMI Blog1998 (10) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... d to defray the expenses of purely personal nature is exempt under section 10(14) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal was correct in holding that the living allowance is a special allowance specifically granted to meet expenses incurred wholly, necessarily and exclusively in the performance of the duties of an office or employment ?" The facts, in brief, are as follows : The assessment year involved is 1978-79. The assessees, who are five in number, are foreign technicians. They were employed by Messrs. L' Air Liquide of France (hereinafter called as "foreign company"). Messrs. Bharat Heavy Plate and Vessels Ltd., Visakhapatnam (h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 87,908 5. F. A. J. Joseph ITA 392/83 not available 77,375 The assessees claimed exemption of these allowances under section 10(14) of the Income-tax Act, 1961 (for short "the Act"). The Income-tax Officer did not agree with the claim of the assessees on the ground that the allowance is being granted to defray the expenses of purely personal nature. On appeal, the Commissioner of Income-tax (Appeals) held that a sum of ₹ 200 per day could be considered as expenses which each assessee requires solely on account of the fact that he had to discharge his duties in a foreign country, and that the remaining amount of daily allowance will be treated as referable to purely personal expenses of each of the appellants before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uties to be performed by the assessee. In order to appreciate the contention of learned standing counsel for the Revenue, it would be relevant here to extract section 10(14) of the Act which is in the following terms : "Any special allowance or benefit, not being in the nature of an entertainment allowance or other 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, to the extent to which such expenses are actually incurred for that purpose. Explanation.--For the removal of doubts, it is hereby declared that any allowance granted to the assessee to meet his personal expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also provided with living accommodation with air conditioner, refrigerator and electricity and water, and free transport from place of residence to work site and back daily. In other words, in addition to daily fees they were paid a living allowance. From the agreement it is not clear as to for what purposes this living allowance was given, whether it is for the purpose of meeting the personal expenditure of the assessees or for the purpose of meeting expenditure incurred by them in the performance of the duties of an office or employment of profit. In other words, there is no material to hold that the living allowance paid is towards the expenditure incurred by the assessees in the performance of the duties of an office or employment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading of section 10(14) of the Income-tax Act, 1961, makes it clear that one of the preconditions for the claim of exemption is that the allowance in question should have been specifically granted to meet expenses wholly incurred in the performance of duties of office and the exemption is only to the extent such expenses were actually incurred." It was further held : "In the instant case, there was no evidence to suggest that the whole or any part of the amount received by the assessee as living allowance represented expenses actually incurred by the assessee in the performance of duties of his office. One of the necessary ingredients of section 10(14) being absent in this case, the assessee could not claim any exemption in re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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