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TMI Blog2018 (6) TMI 1845X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance over and above the official accommodation provided to the Judicial Officer. Therefore, the Hon'ble Supreme Court has held that the Judicial Officers are entitled for house rent allowance only when the Government, for any reason, is not able to make allotment or make available official accommodation. Thus as per the judgment of Hon'ble Supreme Court the Judicial officers are entitled for the house rent allowance at par with the other government officials and even equal to the judges of Hon'ble High Courts subject to the quantum of allowance varies from case to case depending upon the percentage of salary. Though the house rent allowance is exempt from tax as per provisions of High Courts judges (salaries and conditions of service) Act, 1954 as well as Supreme Court judges (Salaries and conditions of service) Act, 1958 however, the payment of HRA to the Judicial Officer is not governed by the provisions of these Acts. Section 22D of High Court judges (Salaries and conditions of service) Act 1954 and Section 23D of Supreme Court judges (Salaries and conditions of service) Act 1958 are pari material. Thus it is clear that the value of rent free official residenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while computing income under the head salary. Residence Office Allowance - We note that residence office allowance of Rs. 3,000/- received by the assessee is on account of minimum day to day expenses incurred by the assessee for keeping the residence office functional. Therefore, the expenses incurred on account of official work which is reimbursed by the Government in the shape of allowance cannot be treated as income of the assessee. In our view the allowance is paid to the Judicial Officer to avoid the furnishing accounts of petty expenses by the Judicial Officer for reimbursement. Thus, to avoid the production or furnishing of account of petty expenses in respect of residence office, the allowance is paid in lieu of reimbursement of such petty expenses. Accordingly, the residence office allowance cannot be treated as income of the assessee and the same has to be excluded from the salary income. Leave Encashment - Though there is no provisions under the Income Tax Act to exempt the leave encashment from tax during the service of Government employee except the provisions of Section 10(10AA)(i) of the Act applicable at the time of superannuation. Notification of Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee as exempt. The assessee is a judicial Officer of Rajasthan judicial services and at present working as Additional District Judge. The assessee filed his return of income on 02.07.2011 declaring total income of Rs. 11,97,350/-. The AO noted that the assessee has received various allowances apart from the salary and claimed the allowance as exempt from tax as under:- 1. H.R.A. allowances Rs. 1,20,760/- 2. Medical allowances Rs. 57,000/- 3. Sumptuary allowance Rs. 68,000/- 4. Residence office allowance Rs. 3,000/- The AO disallowed the claim of the assessee by holding that as per the provisions of Income Tax Act these allowances are not exempt from tax but are part of the salary income of the assessee. The assessee challenged the action of the AO before the ld. CIT(A) and contended that as per the recommendation of the Shetty Commission these allowances are tax free and not to be included in the salary income of the assessee for the purpose of income tax. The ld. CIT(A) did not accept the contention of the assessee and confirmed the disallowance made by the AO. 3. Before us, the ld. Counsel for the assessee has submitted that these allowances have been paid to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has placed reliance on the recommendation of the Shetty Commission and submitted that as per the recommendation of the Shetty Commission, the HRA received by the judicial officer is exempt from tax. However, we find that this issue of entitlement of judicial official of salary and allowances as per the recommendation of the Shetty Commission was considered by the Hon'ble Supreme Court in case of All India judges Association Ors. v. Union of India Ors 2002(2) SCR 712 and held as under:- One of the recommendations of the Shetty Commission is in relation to the grant of the house rent allowance. The recommendation is that official accommodation should be made available to the members of the judicial service who should pay 12.5% of the salary as rent. The Commission further recommends that in addition to the allotment of the said premises, the judicial officer should also get house rent allowance. In our opinion, this double benefit is uncalled for. It is most desirable and imperative that free government accommodation should be made available to the judicial officers. Taking income consideration, the fact that the accommodation which is made available to the judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him under sub-section (1A) of that section; (b) the value of the conveyance facilities provided to a judge under section 23A; (c) the sumptuary allowance provided to a judge under Section 23B; (d) the value of leave travel concession provided to a judge and members of his family, shall not be included in the computation of his income chargeable under the head salaries under section 15 of the Income-tax act, 1961. Thus, it is clear that the value of rent free official residence provided to a judge or the allowance paid to him under sub-section (1A) of Section 23 is excluded is exempt from liability to pay income tax. The provisions of High Court judges (Salaries and conditions of service) Act 1954 and as well as the Hon'ble Supreme Court judges (Salaries and conditions of service) Act 1958 are applicable only in respect of the judges of Hon'ble High Courts and Hon'ble Supreme court. The Judicial Officers government by the service conditions of the state higher judiciary cannot claim the benefit of High Courts judges (Salaries and conditions of service) Act 1954 as well as the Supreme Court Judges (Salaries and conditions of service) Act 1958. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly for medical allowance of Rs. 100 per month. She has relied upon the orders of the authorities below. 8. We have considered the rival submissions as well as the relevant material on record. In view of the assessment order in case of Smt. Shilpa Sameer, we direct the AO to reconsider this issue of allowing the claim of exemption of medical allowance to the extent of Rs. 15,000/-. If the Assessment order in case of Smt. Shilpa Sameer is not disturbed till date then the claim of the assessee shall also be allowed to the extent of Rs. 15,000/-. 9. Sumptuary allowance:- The learned counsel for the assessee has submitted that the sumptuary allowance paid to the judicial Officer is excluded from the income as it is in the nature of entertainment allowance and not an income of the assessee. He has further contended that this allowance is paid only to meet the expenses to be incurred by the Judicial Officer on account of entertainment. He has referred to the CBDT Circular No. 35/32/66-IT(B), dated 24-9-1966 and submitted that the CBDT has clarified that the Sumptuary allowance received by a persons who is in receipt of salary from the Government is required to be deducted in comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above CBDT clarification we hold that the Sumptuary allowance is exempt from payment of income tax and accordingly to be excluded as a deduction while computing income under the head salary. 12. Residence Office Allowance:- The assessee received residence office allowance of Rs. 3,000/- which was claimed as exempt from tax. The AO has added the said amount to the income of the assessee. The ld. CIT(A) has confirmed the addition made by the AO. 13. Before us, the learned counsel for the assessee has submitted that this allowance is paid to the Judicial Officer on account of the expenditure incurred in maintaining the residence office and therefore, the same cannot be treated as income of the assessee. 14. On the other hand, the ld. DR has relied upon the orders of the authorities below and submitted that there is no provision in the Income-tax Act to exempt the said allowance from tax. 15. We have considered the rival submissions as well as the relevant material on record. At the outset, we note that residence office allowance of Rs. 3,000/- received by the assessee is on account of minimum day to day expenses incurred by the assessee for keeping the residence off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Government of India, Ministry of law and justice (Department of Justice), New Delhi in their letter No. 19018/03/2012-Jus, dated 19th February, 2013 and direction of Hon'ble Supreme Court, the State Government after careful consideration have decided that the encashment of leave admissible to Judicial Officers in the State shall continue to be subject to applicable taxes. This Department earlier Resolution No. 9033/L., dated the 17th August, 2010 modified accordingly. This has been concurred in by Finance Department vide their U.O.R. No. 41 CS-II, dated the 30th May, 2013. Therefore, vide this notification the Government of Odisha after consulting the Ministry of Law and Justice Government of India has decided that encashment of leave admissible to Judicial Officer in state shall continue to subject to applicable taxes. The language of the said gazette notification shows that the earlier resolution dated 17.08.2010 was modified vide this gazette notification dated 25.06.2013. Therefore, the said notification cannot be applied to the assessee before us with retrospective effect. The Hon'ble Supreme Court vide decision dated 07.02.2006 has reproduced the recomm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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