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Justice K. K. Dube Vs. Income-tax Officer. - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Jabalpur
Decided On
Reported in(1986)17ITD658Jab
AppellantJustice K. K. Dube
Respondentincome-tax Officer.
Excerpt:
.....act, 1961 (the act), of the commissioner.2. the assessee, honble mr. justice k. k. dube, received conveyance allowance amounting to rs. 8,700 at the rate of rs. 300 per month, for the period 1-10-1974 to 28-2-1977. it was claimed before the ito that the entire amount of conveyance allowance was exempt under section 10(14) of the act. the ito while completing the assessment, accepted the assessees plea. subsequently, however, the commissioner was of the view that the assessee was entitled to the claim of exemption under section10(14), only to the extent to the conveyance allowance relating to the assessment year 1977-78, i.e., rs. 3,600 in the aggregate, and not for the balance amount of rs. 5,100. the commissioner, therefore, held that the action of the ito in allowing the claim of.....
Judgment:
Per Shri I. S. Nigam, Accountant Member - This is an appeal filed by the assessee against the order under section 263 of the Income-tax Act, 1961 (the Act), of the Commissioner.

2. The assessee, Honble Mr. Justice K. K. Dube, received conveyance allowance amounting to Rs. 8,700 at the rate of Rs. 300 per month, for the period 1-10-1974 to 28-2-1977. It was claimed before the ITO that the entire amount of conveyance allowance was exempt under section 10(14) of the Act. The ITO while completing the assessment, accepted the assessees plea. Subsequently, however, the Commissioner was of the view that the assessee was entitled to the claim of exemption under section10(14), only to the extent to the conveyance allowance relating to the assessment year 1977-78, i.e., Rs. 3,600 in the aggregate, and not for the balance amount of Rs. 5,100. The Commissioner, therefore, held that the action of the ITO in allowing the claim of exemption to the entire amount of Rs. 8,700 instead of restricting it to Rs. 3,600 was erroneous and prejudicial to the interests of the revenue. The Commissioner, therefore, set aside the assessment with a direction to the ITO to make the assessment afresh. Aggrieved by the order of the Commissioner, the assessee has come up in the present appeal before us.

3. The assessees learned counsel, Shri Nema, filed before us a copy of the Boards Circular F. No. 200/71/76-IT (AI) dated 12-8-1977, where the Board had directed that in the case of Judges of the Honble High Courts, the requirement of furnishing a separate certificate that the conveyance allowance paid to them under section 22B of the High Court Judges (Conditions of Service) Amendment Act, was only a reimbursement of expenses laid out wholly, necessarily and exclusively for the performance of the duties of office of employment, should be dispensed with. The Board further directed that considering the expenditure normally incurred in the running of the motor car and the conveyance allowance granted to the Judges, the ITO need not be too meticulous to enquire whether the expenses on running of the motor car, wholly, necessarily and exclusively in the performance of duties, were to the extent of the allowance granted to the judges. On this basis, Shri Nema submitted that it was not open to the income-tax authorities to embark upon an inquiry whether the expenses on running of the motor car by the assessee, who was a Judge of the Honble Madhya Pradesh High Court, in connection with the performance of duties of his employment, were to the extent of the conveyance allowance granted to him. He further submitted that even though the conveyance allowance received in this year related partly to the conveyance allowance for the earlier years, the fact remained that it was to meet the expenses incurred by the assessee wholly, necessarily and exclusively in the performance of duties of his office. Summoning up, Shri Nema vehemently argued before us that the order of the Commissioner under section 263, under consideration here, was erroneous and should be cancelled.

4. On the other hand, he learned departmental representative Shri Chakraborty, submitted to us that the Boards circular applied only to the conveyance allowance for the year under consideration and not to the arrears of conveyance allowance. He further submitted that the proper cause for the assessee was to make an application under section 89 of the Act, for spread over of the conveyance allowance to the assessment years to which it related and since, this was not done, the assessee had missed the bus. He, therefore, vehemently argued before us that the order of the Commissioner under section 263 was justified.

5. We have carefully considered the rival submissions. At the outset, it would be necessary to point out that the Honble Supreme Court in the cases of Navnit Lal C. Javeri v. K. K. Sen, AAC [1965] 56 ITR 198 and Ellerman Lines Ltd. v. CIT [1971] 82 ITR 913 has laid down that circulars issued by the Board in favour of the assessees are binding on the income-tax authorities, even if there was some deviation from the provisions of the Act. Viewed in this context, it is not under dispute that the Board by its Circular F. No. 200/71/76-IT (AI) dated 12-8-1977, directed the ITO that looking to the amount of conveyance allowance granted to the judges and the expenditure that is normally incurred in the running of the motor car, the ITO should accept that the conveyance allowance was a reimbursement of the expenditure incurred by the assessee wholly, exclusively and necessarily in the performance of duties of the office of the High Court Judge. It therefore, follows that whatever conveyance allowance was granted to the assessee was towards reimbursement of expenses incurred by him on maintaining and running the motor car wholly, exclusively and necessarily in the performance of his duties as a Judge of the Honble High Court. It will also be necessary to point out that the conveyance allowance granted to the assessee was only at the rate of Rs. 300 per month and if the conveyance allowance granted was not for only 12 months, i.e., the previous year relevant to the assessment year, under appeal before us, but also towards arrears of 17 months prior to the commencement of the previous year, relevant to this assessment year, this too was the reimbursement of expenses of maintenance of the motor car in connection with the performance of duties of the office of the High Court Judge. The entire amount of conveyance allowance amounted to Rs. 8,700, which consisted partly of conveyance allowance for 12 months in this year at the rate of Rs. 300 per month, i.e., Rs. 3,600, and the balance, which was, therefore, towards reimbursement of expenses incurred by the assessee wholly, exclusively and necessarily for the performance of duties of his office of a High Court Judge. In these circumstances, there appears to be no justification for restricting the claim of exemption under section 10(14) to only Rs. 3,600, which relates to this year, instead of allowance, the claim of exemption for the entire amount, which was at the rate of Rs. 300 per month, for reimbursement of expenses incurred by the assessee wholly, exclusively and necessarily in the maintenance of motor car of incidental to performace of duties of the office of a High Court Judge. The assessee was, therefore, entitled to the claim of exemption under section 10(14) on the entire amount of Rs. 8,700 and the assessment order of the ITO allowing the entire claim of exemption was perfectly justified. The Commissioner, therefore, in our view, erroneously came to the conclusion that the claim of exemption should be limited only to the amount of Rs. 3,600 relating to this year and the assessment should, therefore, be aside for making it afresh. The order of the Commissioner, therefore, does not appear to be correct and is hereby cancelled.


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