Per Shri B. V. Venkataramaiah, Accountant Member - The assessee had during the relevant previous year received leave travel concession which was included in the gross salary and the ITO failed to deduct the same. On appeal, the AAC held that as the ITO had not given any reason for the disallowance of the claimed which had been allowed in the earlier year the assessees claim has to be sustained. The revenue is in appeal.
2. The revenues claim is that the leave travel concession exemption cannot exceed the exemption as granted in the first year. Section 10(5) (ii) of the Income-tax Act, 1961 (the Act) reads as follows : "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) for his employer or former employer for [himself and his family], in connection with his proceeding to any place in India after retirement form service or after the termination of his service : Provided that the amount 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 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.
Explanation : For the purposes of this sub-clause, family, in relation to an individual, means - (i) the spouse and children of the individual; and (ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual;" The relevant rule, rule 2B of the Income-tax Rules, 1962, is as follows : "The amount exempt under item (a) of sub-clause (ii) of clause (5) of section 10 in respect of the value of the travel concession or assistance received by or due to the individual from his employer for himself and his family, in connection with his proceeding on leave to any place in India, may exceed the value of the travel concession or the assistance which would have been received by or due to him in connection with his proceeding to his home district in India on leave in the cases and under the circumstances specified below, namely :- (a) where the individual is entitled to such travel concession or assistance once in a block of four calendar years commencing from the calendar year 1974, the value of such travel concession or assistance availed of in each such book; (b) where the individual is entitled to such travel concession or assistance more than once in any such block of four calendar years, the value of the travel concession or assistance first availed of by him in each such block; (c) where such travel concession or assistance is not availed of by the individual during any such block of four calendar years, the value of the travel concession or assistance, if any, first availed of by the individual during the first calendar year of the immediately succeeding block of four calendar years.
Explanation : The value of the travel concession or assistance referred to in clause (c) shall not be taken into account in determining the eligibility of the value of the travel concession or assistance under clause (a) or, as the case may be clause (b) of this rule." The rule as regards the Government servants is that travel concession to any place in India can be availed of once in four years. There is no stipulation that the leave travel concession received in the subsequent block of 4 years should not exceed what was received in the first block of 4 years. For example, if an employee stationed in Bangalore, avails of leave travel concession to Bombay in the first year, there is no prohibition against his claiming a higher allowance in the subsequent blocks by going to, say, Calcutta or Kashmir. Therefore, the rule for non-Government servants cannot prescribed a harsher condition. If it does the rule will have to be ignored. Further, there is nothing on record to substantiate the arguments now raised on behalf of the revenue.