1. The appeal is by the assessee who is a Development Officer in the Life Insurance Corporation (LIC). The assessee, for the purpose of carrying out of his development work, was paid conveyance allowance of Rs. 25,417 by the LIC. Out of this, the assessee claimed exemption under Section 10(14) of the Income-tax Act, 1961 ('the Act') of Rs. 13,377. The assessee later revised its claim whereby the entire amount of Rs. 25,417 was claimed as exempt. The ITO wanted the assessee to produce evidence and vouchers. The ITO then considered Section 10(74) and was of the view that only that amount would be exempt which has been actually spent for meeting out the official duties. He then discussed the duties of the Development Officer and since the assessee did not maintain the details and the vouchers and also referred to the certificate issued by the LIC which categorically provided that for the purpose of tax calculation they have considered Rs. 13,377 as exempt under Section 10(14). He, accordingly, disallowed Rs. 12,000 claimed by the assessee. In view of the reasons mentioned by the ITO, the AAC confirmed his order. The AAC did not accept the reasoning provided by the assessee that the assessee was entitled to an additional deduction of 40 per cent of Rs. 50,000 which represented the incentive bonus paid to the assessee. The reliance placed on the Chandigarh Bench decision for this proposition was rejected. Before us, Shri B. L. Chopra, the learned counsel for the assessee, referred us to the salary certificate issued by the LIC. He drew our attention to paragraph No. 4 of the salary certificate which reads as under : Certified that the total amount of salaries, etc., paid to Shri K.C. Gokani, as stated above, includes conveyance allowance of Rs. 35,417.35 paid to meet expenses of conveyance incurred in the performance of duties of his office. Certified further that out of such payment a sum of Rs. 13,377.45 has been treated as exempt from tax under Section 10(74) of the Income-tax Act, 1961 for the purpose of deducting tax at source.
He also drew our attention to the circular issued by the LIC as circular No. 43 of 1979 dated 19-12-1979. According to Shri Chopra, the assessee, in fact, had made a lesser claim while according to the Chandigarh Bench decision in the case of ITO v. Rajkumar Sethi  1 ITD 907 the assessee was entitled to 40 per cent of the incentive bonus as additional deduction while the department was allowing 20 per cent of such incentive bonus as deduction. According to Shri Chopra, since the actual expenditure on conveyance was very much higher and the assessee had to meet the same from the incentive bonus also this additional deduction of 40 per cent was claimed and was allowed. He, therefore, pleaded that the assessee is entitled to the deduction of Rs. 25,417 plus Rs. 20,000. He also submitted that the additional ground of claiming this as deductible was raised before the AAC. He relied on the Gujarat High Court decision in the case of CIT v.Cellulose Products of India Ltd.  151 ITR 499 (FB).
2. Shri Ruhela, the learned departmental representative, on the other hand, submitted that granting of conveyance is one and claim of expenditure on conveyance is another. Shri Ruhela further submitted that the assessee was specifically asked to provide details as well as evidences in support of his claim of expenditure which the assessee did not produce. Shri Ruhela then referred to the salary certificate and submitted that then the LIC themselves are allowing exemption of Rs. 13,377 only, this further goes to support the departmental view that only to that extent Section 10(14) exemption is applicable. As regards the claim of 40 per cent deduction, the same was never made before the ITO. Shri Ruhela, therefore, submitted that without any detail, further deduction is not permissible.
3. We have heard the parties and considered the materials that have been placed on record. We have already reproduced earlier paragraph No.4 of the salary certificate, which says that the conveyance allowance that was provided to the assessee was to the tune of Rs. 25,417. The circular dated 19-12-1979 issued by the LIC to its various offices is reproduced below : LIFE INSURANCE CORPORATION OF INDIA, DIVISIONAL OFFICE, AJJVIER.Ref. Dev/Addl. CA. Dated 19-12-1979 Circular No. 43 of 1979 We reproduce herein below Central Office Circular Ref. DD/ZD/58 of 1979 dated 4th December, 1979 on the above subject which is self-explanatory : 'Please refer to the Central Office Accounts Department Circular Ref. Accts/Income-tax/CA/ADER dated 4th July, 1979.
Recently, a clarification from us regarding the exemption for the purpose of deduction of income-tax additional conveyance allowance was sought.
You are aware that the additional conveyance allowance is granted by the Corporation to the Development Officers to oil-set the fuel and other expenses that would have been incurred by the concerned officers during the course of the year to procure new business by contacting proponents, agents and also by extensively touring the area allotted to them.
As far as granting of tax exemption is concerned, it appears different tax authorities follow different procedures in different regions.
Therefore, it has been decided that the following procedures may be followed for deduction of tax at source at the time of payment of additional conveyance allowance by our offices : (a) Whether the additional conveyance allowance is taxed to the full by the income-tax authorities, the same practice may be followed and the concerned officer has to claim refund by filing his tax returns.
(b) Whether the income-tax authorities allow only a fixed sum out of the additional conveyance allowance as exempt from tax, we may also treat this sum as exempt from tax for calcuiating the amount of tax to be deducted at source.
(c) Whether the exemption is granted on a percentage basis, that is to say, 80 per cent of the additional conveyance allowance or 90 per cent of the additional conveyance allowance as the case may be, by the income-tax authorities, the offices can also allow for this percentage while making the calculations for deduction at source.
It is also necessary that for ensuring that proper deduction of tax at source is made by our offices, a copy of the duly certified assessment order given by the income-tax authority to the concerned Development Officer should also be obtained and kept as record.' Please see that the instructions contained in the above connection are strictly complied with while releasing additional conveyance allowance to Development Officers.
It sounds from the aforementioned circular that the employer knowing fully well that the allowance granted by him is towards official purposes only, which is. in fact, the minimum that is paid to the employees, instead of boldly saying that the entire sum so granted is exempt under Section 10(74), has avoided owning of such a responsibility. This is so in view of its own mentioning that offices are advised to allow the exemption to the extent so treated by the administrators. It further says that different authorities are exempting different amounts. It is an admitted fact that such officers shall get the maximum amount as fixed or arrived at by the employer irrespective of the quantum of expenditure incurred by the employee.
The employer has realised that such conveyance allowances have to be provided in the interest of their business, considering the area of jurisdiction under such officers. The amount is calculated as a proportion of the new business developed and the allowance varies in relation to the business developed each month. In our view, calling this conveyance paid as an allowance is a misnomer and is in fact reimbursement of expenditure. Merely because, it is called as an allowance, its character does not change from reimbursement of expenditure incurred to that of an allowance. We are, therefore, of the view that the entire amount of Rs. 25,417 should be exempt under Section 10(74) and we hold accordingly.
4. As regards the additional ground of claiming of deduction at the rate of 40 per cent of the incentive bonus, the assessee filed copies of assessment orders up to the assessment year 1984-85, where the ITO has considered the same and had allowed the assessee the deduction so claimed. The assessee had preferred this additional ground before the AAC, who had rejected the same for the reason that the assessee did not make any claim before the ITO and it required further examination for which reliance was placed on the Calcutta High Court decision in the case of Jute Corporation of India Ltd. v. CIT  131 ITR 412, we reject this ground for the same reason. Moreover, the relief already granted covers all actual expenditure incurred.