1. The assessee, an individual, is in employment of Advance Plastics (P.) Ltd., Dynamic Plastics (P.) Ltd., Nanavati Dies & Tools (P.) Ltd., and Nanavati Sales (P.) Ltd. The proceedings relate to his assessment for the assessment year 1979-80 for which the previous year ended on 31-10-1978. It is common ground that during the previous year, the assessee went on leave to Madhav Garh (Madhya Pradesh) and under the terms of the agreement with the above concerns, he was reimbursed to the extent of expenses amounting to Rs. 5,250, the details of which are as under: Rs. Rs. Train fare to Indore 870 Indore to Madhav Garh taxi fare 150 Madhav Garh to Indore taxi fare 150 Train fare to Bombay 870 2,040 Local conveyance 381 Hotel 2,750 Washing, Tips, etc.
79 5,250 2. The above amount of Rs. 5,250 was claimed as exempt under Section 10(5) of the Incoim-tax Act, 1961 ('the Act'). However, the ITO allowed exemption with regard to the reimbursement of all other expenses except the hotel charges amounting to Rs. 2,750. Observing that the assessee was entitled to exemption under Section 10(5) read with Rule 2B of the Income-tax Rules, 1962 to the extent of fare only.
3. Referring to the provisions of Section 10(5), the AAC has confirmed the disallowance in the following words: 3. The provision speaks that the travel concession or assistance received by or due shall not exceed the amount having regard to the travel concession or assistance granted to the employees of the Central Government. In this case the ITO has allowed the travel concession or assistance limited to the railway fare incurred by the assessee because the Central Government only contributes to the railway fare, no amount exceeding the railway fare is to be reimbursed or borne by the Central Government. Considering the aforesaid facts the disallowance made by the ITO amounting to Rs. 2,750 is confirmed.
4. It is fairly admitted before us by Shri Dilip Chokshi, the learned Counsel for the assessee, that the assessee's case will fall, if at all, for exemption under Section 10(5)(ii). He took us through the said provisions to show that the exemption is available to an assessee in relation to the value of any travel concession or assistance in connection with his proceeding on leave to any place in India. Inviting our attention to the fact that the Rule 2B does not have any bearing on the case of the assessee. Shri Chokshi submitted that the Legislature has used two expressions in the provisions, namely: 'any travel concession' and 'assistance' of course in connection with proceeding on leave to any place in India. It is contended that while the expression 'any travel concession' refers to the travelling expenses, the other expression 'assistance' would cover all expenses relating to or in the course of leave in connection with which the asssessee has proceeded to any place in India. Accordingly, it is submitted that the hotel charges during the leave period are covered by Section 10(5)(ii) and the departmental authorities were not justified in disallowing the assessee's claim.
5. The departmental representative has, on the other hand, strongly relied on the order of the AAC. According to Shri M.N. Nambiar, the interpretation of the provisions of Section 10(5)(ii) takes colour from Rule 2B. In this connection he makes a pointed reference to the proviso to Section 10(5)(ii) where it is provided that rules will be framed having regard to the travel concession or assistance granted to the employees of the Central Government. He also contends that the word 'assistance' has to be interpreted in the light of the word 'travel' in connection with which it is used.
6. We have heard the rival contentions. We have carefully gone through the provisions of Section 10(5)(ii). For the sake of convenience, the provisions are reproduced hereunder: 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-- (5) subject to such conditions as the Central Government may prescribe, in the case of an individual being a citizen of India,-- (ii) in relation to any other assessment year the value of any travel concession or assistance received by or due to such individual,-- (a) from his employer for himself and his family, in connection with his proceeding on leave to any place in India; (b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service: Provided that the amount exempt under item (a) or item (b) of this sub-clause shall not, except in such cases and under such circumstances as may be prescribed having regard to the travel concession or assistance granted to the employees of the Central Government, exceed the value of the travel concession or assistance which would have been received by or due to the individual in connection with his proceeding to his home-district in India on leave or, as the case may be, after retirement from service or after the termination of his service.
It is common ground that there is no decision of the Tribunal, the High Court or the Supreme Court having a direct bearing on the issue and that to the knowledge of the parties there are no instructions, circulars, notifications or rules promulgated by the CBDT in this regard. Therefore, we have to decide the question before us on the basis of first impression.
7. The Legislature has evidently used the conjunction 'or' between the words 'concession' and 'assistance'. The word 'travel' precedes the word 'concession'. The question that arises for consideration is whether the word 'travel' should be read both with the words 'concession' and 'assistance' or with the word 'concession only'.
Having regard to the ordinary rules of grammar and the context in which these words are used, we hold that the word 'travel' should be read both with the words 'concession' and 'assistance'. There should, thus, be no difficulty in further holding that the expression 'travel assistance' cannot but mean and refer to some kind of travelling assistance. The expression 'in connection with proceeding on leave or after retirement of service, etc.' again defines the kind of travel, the value of concession or assistance in regard to which is exempt. In this view of the matter, we hold that the hotel charges at the place where the assessee decided to spend his leave do not fall under Section 10(5)(ii). The disallowance is, therefore, confirmed.