Shri Moghjibhai Virsangbhai Chaudhary, Palanpur V. The Income tax Officer,Ward-3, Palanpur

ITA 1383/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1946 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M G PATEL
• Keywords: Salary income
• Section: 10(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.1383/AHD/2008 (ASSESSMENT YEAR:-2004-05) SHRI MOGHJIBHAI VIRSANGBHAI CHAUDHARY, AMBIKANAGAR, IDGAH ROAD, PALANPUR V/S THE INCOME-TAX OFFICER, WARD-3, PALANPUR PAN: AEPC 0874 F [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI M G PATEL, AR REVENUE BY:- SHRI ANIL KUMAR, DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 3 RD MARCH, 2008 OF THE LD. CIT(APPEALS)-XV, AHMEDABAD, FOR THE ASSESSMENT YEAR (AY) 2004-05, RAISES THE FOLLOWING GROUNDS:- 1 THE LEARNED CIT(A)-XV, AHMEDABAD HAS ERRED IN LA W AS WELL AS ON FACTS BY NOT ALLOWING FULLY, CLAIM OF DEDUCTION U/S 10(14) OF THE INCOME- TAX ACT, 1961, IN RESPECT OF CONVEYANCE ALLOWANCE A ND ADDITIONAL CONVEYANCE ALLOWANCE AMOUNTING TO RS.1,75,776/- AND HAS ACCORDINGLY CONFIRMED THE FINDING OF AO. 2 YOUR APPELLANT RESERVES THE RIGHT TO ADD, ALTER, AMEND AND / OR WITHDRAW ANY OF THE ABOVE GROUNDS OF APPEAL. 2 FACTS, IN BRIEF AS PER RELEVANT ORDERS ARE THAT T HE RETURN DECLARING INCOME OF RS.4,38,870/- FILED ON 30-07-20 04 BY THE ASSESSEE, A DEVELOPMENT OFFICER OF THE LIC OF INDIA , , AFTER BEING PROCESSED ON 26.8.2004 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], WAS SELECTE D FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT. ON V ERIFICATION OF RETURN, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE RECEIVED CONVEYANCE ALLOWANCE OF RS.24,310/- AND AD DITIONAL CONVEYANCE ALLOWANCE OF RS.L,51,656/- FROM THE LIC OF INDIA AND THE LATTER WHILE CALCULATING TAX ON SALARY INCOME, ALLO WED DEDUCTION OF RS.24,130/- ON ACCOUNT OF CONVEYANCE ALLOWANCE & R S.29,925/- OUT ITA N O.1383/AHD/2008 2 OF ADDITIONAL CONVEYANCE ALLOWANCE OF RS.1,51,656/- U/S. 10(14) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S, TO A QUERY BY THE AO, SEEKING THE DETAILS OF EXPENDITURE INCURR ED OUT OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLO WANCE, THE ASSESSEE VIDE LETTER DATED 26.12.2005 INFORMED THAT HE HAD NOT KEPT ANY VOUCHER FOR EXPENSES INCURRED TO EARN ADDITIONA L CONVEYANCE ALLOWANCE. IT WAS FURTHER SUBMITTED THAT CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE WAS CLAIMED EXEMPT AS PER JUDGMENT OF THE TRIBUNAL IN HIS OWN CASE. HOWEVER, THE AO REJECTED THE CLAIM ON THE GROUND THAT ADDITIONAL CONVEYANCE ALLOWANCE WAS NOT NOTIFIED U/S. 10(14)(I) OF THE ACT NOR THE ASSESSEE FURNISHED ANY EVIDENCE THAT THE AMOUNT WAS ACTUALLY INCURRED WHOLLY, NECESSARILY A ND EXCLUSIVELY IN THE PERFORMANCE OF THE DUTIES OF HIS OFFICE OR EMPLOYM ENT OF PROFIT WITHIN THE MEANING OF PROVISION OF SECTION 10(14)(I) OF THE ACT, DESPI TE SUFFICIENT OPPORTUNITY ALLOWED. INSTEAD THE ASSESSEE ADMITTED IN HIS LETTER DATED 2 6.12.2005 THAT HE HAD NOT KEPT ANY VOUCHERS NOR EVEN HE SPECIFICALLY POINTED OUT THE NATURE OF EXPENDITURE . THE AO ALSO DISTINGUISHED THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE PERTAINING TO THE A.Y.90-91 TO 95-96. INTER ALIA, T HE AO RELIED UPON DECISIONS D.C.CHARAYA VS. ITO, (2004) 191 CTR (RAJ.) 356 (200 5) 276 ITR 60 (RAJ) , CIT VS. P. ARANGASWAMY, (1998) 101 TAX MAN 51 (MAD) , C IT VS. V. SEKAR, (2003) 129 TAX MAN 226 (MAD) , CIT VS. E.A. RAJENDRAN,(199 7) 142 CTR (MAD) 244: (1999) 235 ITR 514 (MAD): (1999) 104 TAXMAN 587 (MA D) AND AMBRISH VS. ACIT, (2004) 87TTJ (DEL)777. IN NUTSHELL, THE AO R EJECTED THE CLAIM FOR EXEMPTION OF AN AMOUNT OF RS. 1,22,331/- IN TERMS O F PROVISIONS OF SEC.10(14)(I) OF THE ACT R.W. RULE 2BB(1)(I) OF THE I.T. RULES,19 62. 3. ON APPEAL, THE LEARNED CIT(A) UPHELD THE DISALLO WANCE WITH THE FOLLOWING OBSERVATIONS:- 4 DURING THE COURSE OF APPELLATE PROCEEDINGS, SHRI N A JAPEE, CA APPEARED AND FILED WRITTEN SUBMISSIONS ON 3-3-2008, PLEADING THAT THE ADDITIONAL CONVEYANCE ALLOWANCE HAS BEEN CLAIMED EX EMPT U/S 10(14) AS IT EXCLUSIVELY INCURRED BY THE APPELLANT FOR THE PE RFORMANCE OF DUTY. DECISION OF ITAT A BENCH IN THE CASE OF APPELLANT HIMSELF IN ITA NOS. ITA N O.1383/AHD/2008 3 2114, 1579, 258, 259, 2115/AHD/96 AND 1729/AHD/98 F OR AYS. 1990-91 TO 1994-95 WAS RELIED UPON IN SUPPORT OF THE CLAIM. 5. PERUSAL OF THE ASSESSMENT ORDER SHOW THAT THE DI SALLOWANCE WAS MADE AS PER PARA 7 OF THE ORDER ON THE GROUND THAT ADDITIONAL CONVEYANCE ALLOWANCE IS NOT NOTIFIED U/S. 10(14)(I) OF THE ACT AND ON THE BASIS OF VARIOUS HIGH COURT DECISIONS WHICH HAVE HELD ADDITI ONAL CONVEYANCE ALLOWANCE AS TAXABLE. IN PARA 7, THE AO HAS ALSO RE LIED ON THE AMOUNTS QUANTIFIED BY THE EMPLOYER OF THE APPELLANT AS EXEM PT U/S. 10(14). 6. I HAVE GONE THROUGH RIVAL SUBMISSIONS AND FIND T HAT THE AO HAS BASED HIS DISALLOWANCE ON THE BASIS OF THE QUANTIFI CATION DONE BY THE EMPLOYER OF THE APPELLANT OF THE AMOUNT HE COULD CL AIM EXEMPT U/S. 10(14) FOR ADDITIONAL CONVEYANCE ALLOWANCE. HIGH COURT DEC ISIONS CITED BY THE AO ALSO SUPPORT HIS STAND. THE APPELLANT HAS FAILED TO CONVINCE THE AO THAT THE AMOUNT GIVEN TO HIM AS ADDITIONAL CONVEYANCE AL LOWANCE WAS USED WHOLLY, EXCLUSIVELY AND NECESSARILY FOR THE PURPOSE OF OFFICIAL DUTIES, WHICH IS ONE OF THE CONDITIONS REQUIRED FOR OPERATION OF SECTION 10(14). THE DISALLOWANCE MADE IS THEREFORE, CONFIRMED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE MERELY SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE ITAT IN HIS OWN CASE IN ITA NOS. 2114,1579,258,259,2115/AHD./1996 & 1729/AHD./98 FOR THE AYS 1990-91TO 1995-96. THE LEARNED DR, ON THE OTHER HAN D, SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISION OF THE ITAT RELIED U PON BY THE LD. AR. BEFORE PROCEEDING FURTHER, WE MAY HAVE A LOOK AT TH E RELEVANT PROVISIONS OF SEC. 10(14) OF THE ACT, WHICH GOVERN THE EXEMPTION OF SUCH NATURE. THE PROVISIONS OF SAID SECTION READ AS UNDER: 10(14) (I) ANY SUCH SPECIAL ALLOWANCE OR BENEFIT, NOT BEING IN THE NATURE OF A PERQUISITE WITHIN THE MEANING OF CLAUSE (2) OF SECTION 17, SPECIFICALLY GRANTED TO MEET EXPENSES WHOLLY, NECES SARILY AND EXCLUSIVELY INCURRED IN THE PERFORMANCE OF THE DUTI ES OF AN OFFICE OR EMPLOYMENT OF PROFIT, AS MAY BE PRESCRIBED, TO THE EXTENT TO WHICH SUCH EXPENSES ARE ACTUALLY INCURRED FOR THAT PURPOS E; ITA N O.1383/AHD/2008 4 5.1 THE RULE 2BB(1) PRESCRIBING THE ALLOWANCES F OR THE PURPOSE OF SEC.10(14) OF THE ACT, READS AS UNDER: 2BB. PRESCRIBED ALLOWANCES FOR THE PURPOSES OF CLA USE (14) OF SECTION 10. (1) FOR THE PURPOSES OF SUB-CLAUSE (I) OF CLAUSE (1 4) OF SECTION 10, PRESCRIBED ALLOWANCES, BY WHATEVER NAME CALLED, SHA LL BE THE FOLLOWING, NAMELY:--- (A) ANY ALLOWANCE GRANTED TO MEET THE COST OF TRAVE L ON TOUR OR ON TRANSFER; (B) ANY ALLOWANCE, WHETHER, GRANTED ON TOUR OR FOR THE PERIOD OF JOURNEY IN CONNECTION WITH TRANSFER, TO MEET THE OR DINARY DAILY CHARGES INCURRED BY AN EMPLOYEE ON ACCOUNT OF ABSEN CE FROM HIS NORMAL PLACE OF DUTY; (C) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE I NCURRED ON CONVEYANCE IN PERFORMANCE OF DUTIES OF AN OFFICE OR EMPLOYMENT OF PROFIT: PROVIDED THAT FREE CONVEYANCE IS NOT PROVIDED BY TH E EMPLOYER; (D) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE I NCURRED ON A HELPER WHERE SUCH HELPER IS ENGAGED FOR THE PERFORM ANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMENT OF PROFIT; (E) ANY ALLOWANCE GRANTED FOR ENCOURAGING THE ACADE MIC, RESEARCH AND TRAINING PURSUITS IN EDUCATIONAL AND RESEARCH I NSTITUTIONS; (F) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE I NCURRED ON THE PURCHASE OR MAINTENANCE OF UNIFORM FOR WEAR DURING THE PERFORMANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMEN T OF PROFIT. EXPLANATION: FOR THE PURPOSE OF CLAUSE (A), 'ALLOWA NCE GRANTED TO MEET THE COST OF TRAVEL ON TRANSFER' INCLUDES ANY S UM PAID IN CONNECTION WITH TRANSFER, PACKING AND TRANSPORTATIO N OF PERSONAL EFFECTS ON SUCH TRANSFER. 5.2 IN RESPECT OF CLAIM FOR DEDUCTION OF ADDITI ONAL CONVEYANCE ALLOWANCE, WE ARE CONCERNED WITH CLAUSE (C) OF THE AFORESAID RUL ES. IN ORDER TO ALLOW EXEMPTION IN TERMS OF THE AFORESAID PROVISIONS, WHAT IS STIP ULATED IS THAT THE EXPENDITURE SHOULD BE WHOLLY, NECESSARILY AND EXCLUSIVELY ACTUA LLY INCURRED IN THE ITA N O.1383/AHD/2008 5 PERFORMANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMEN T OF PROFIT . THE AO & THE LD. CIT(A) CONCLUDED THAT THE ASSESSEE DID NOT FURNISH ANY DETAILS OR EVIDENCE IN SUPPORT OF EXPENDITURE ON CONVEYANCE ACTUALLY INCUR RED BY THE ASSESSEE, DESPITE SUFFICIENT OPPORTUNITY ALLOWED. THE DETAILS REGAR DING THE SAID EXPENDITURE WERE EVEN NOT PLACED BEFORE US. INSTEAD , THE LD. AR MER ELY RELIED UPON A DECISION OF THE ITAT IN HIS OWN CASE IN ITA NOS. 2114, 1579, 2 58, 259, 2115/AHD./1996 & 1729/AHD./98 FOR THE AYS 1990-91 T O 1995-96. THE LD. AR DID NOT DEMONSTRATE BEFORE US AS TO WHETHE R THE FACTS OBTAINING IN THOSE YEARS WERE SIMILAR TO THE FACTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION. RATHER, WE FIND THAT THE LIC INTROD UCED THE INCENTIVE BONUS SCHEME, 1997 ALONGWITH THE REIMBURSEMENT OF EXPENSES SCHEME, 1997 AND THE ELIGIBLE DOS' COULD CLAIM THE AMOUNT TO BE REIMBURSED UNDER THE SCHEME. MOREOVER, IT RULES,19 62 WERE AMENDED VIDE THE GOVERNMENT OF INDIAS NOTIFICATION NO. S.O . 940 (E) DATED 25-09-2001 WITH EFFECT FROM 01-04-2001. ACCORDINGLY , IN TERMS OF THE AFORESAID SCHEME, DOS DESIRING A HIGHER AMOUNT OF E XEMPTION ON ACCOUNT OF CONVEYANCE ALLOWANCE AND ADDL. CONVEYANC E ALLOWANCE, WERE REQUIRED TO SATISFY THE FOLLOWING CONDITIONS: I. MAINTENANCE OF COMPLETE DETAILS OF JOURNEY UNDER TAKEN FOR OFFICIAL PURPOSE WHICH INCLUDES DETAILS OF JOUR NEY DESTINATION, MILEAGE, AND THE AMOUNT OF EXPENDITURE INCURRED THEREON. II. GIVING A CERTIFICATE THAT THE EXPENDITURE WAS I NCURRED WHOLLY AND EXCLUSIVELY FOR THE PERFORMANCE OF THE O FFICIAL DUTIES; III. THE SUPERVISORY AUTHORITY OF THE EMPLOYEE, WHE REVER APPLICABLE GIVES CERTIFICATE TO THE EFFECT THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PERFORMANCE OF OFFICIAL DUTIES. THEY WERE ALSO REQUIRED TO MAINTAIN A LOG BOOK CONT AINING THE DETAILS OF JOURNEY UNDERTAKEN BY THEM, WHICH IN TUR N HAS TO BE CERTIFIED BY SR. BRANCH MANAGER IN CHARGE. THE PETR OL/DIESEL BILLS ETC HAVE ALSO TO BE PRODUCED FOR CLAIMING HIGHER AMOUNT OF EXEMPTION ITA N O.1383/AHD/2008 6 FROM INCOME TAX DEDUCTIBLE AT SOURCE. IN THE INST ANT CASE, NO SUCH DETAILS WERE FURNISHED BEFORE THE LOWER AUTHORITIES ,DESPITE SUFFICIENT OPPORTUNITY ALLOWED NOR EVEN BEFORE US . IN VIEW OF THE FOREGOING , ESPECIALLY IN VIEW OF AMENDMENT OF RELEVANT PROVISI ONS GOVERNING EXEMPTION U/S 10(14) OF THE ACT WITH EFFECT FROM 01 -04-2001, RELIANCE BY THE LD. AR ON THE AFORESAID DECISION OF THE ITAT IS TOTALLY MISPLACED. 5.3 WE FIND THAT IN LIC VS. UNION OF INDIA & OT HERS ,260 ITR 41(RAJ),HONBLE RAJASTHAN HIGH COURT HELD THAT DEVELOPMENT OFFICER S IN THE LIFE INSURANCE CORPORATION WERE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 10(14) OF THE ACT IN RESPECT OF CONVEYANCE ALLOWANCE/ADDITIONAL CONVEYAN CE ALLOWANCE UPON SATISFYING THE CONDITIONS THAT SUCH ALLOWANCES HAVE ACTUALLY BEEN SPENT FOR THE PURPOSE FOR WHICH THEY WERE GIVEN WHOLLY, NECESSARI LY AND EXCLUSIVELY IN THE PERFORMANCE OF DUTIES 5.4 IN CIT V. BRANCH MANAGER, LIC OF INDIA [2008] 298 1TR 358 (P&H) HONBLE HIGH COURT IN THE CONTEXT OF REIMBURSEMENT OF EXPEN SES SCHEME, 1997, FOLLOWED THE VIEW TAKEN BY HONBLE RAJASTHAN HIGH C OURT IN LIFE INSURANCE CORPORATION OF INDIA'S CASE [2003] 260 ITR 41 , HOLDING THAT THE DEVELOPMENT OFFICERS IN THE LIFE INSURANCE CORPORATION WERE ENT ITLED TO CLAIM EXEMPTION UNDER SECTION 10(14) OF THE ACT IN RESPECT OF CONVEYANCE ALLOWANCE/ADDITIONAL CONVEYANCE ALLOWANCE UPON SATISFYING THE CONDITIONS THAT SUCH ALLOWANCES HAVE ACTUALLY BEEN SPENT FOR THE PURPOSE FOR WHICH THEY WERE GIVEN WHOLLY, NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF DUTIES. 6. IN THE LIGHT OF AFORESAID JUDICIAL VIEW AND CONSIDERING THE FACTS AND CIRCUMSTANCES, SINCE THE ADDITIONAL CONVEYANCE ALLOWANCE PROVIDED BY THE EMPLOYER TO THE ASSESSEE FOR THE PERFORMANCE O F HIS DUTIES FALLS WITHIN THE PROVISIONS OF SECTION 10(14) READ WITH RULE 2BB(1)( C) OF THE IT RULES 1962 AND THE ASSESSEE DID NOT FILE ANY DETAILS OR EVIDENCE O F EXPENSES WHOLLY, NECESSARILY AND EXCLUSIVELY ACTUALLY INCURRED IN THE PERFORMAN CE OF HIS DUTIES BEFORE THE ITA N O.1383/AHD/2008 7 LOWER AUTHORITIES AND EVEN BEFORE US, WE ARE NOT IN CLINED TO TAKE A DIFFERENT VIEW IN THE MATTER. THEREFORE, GROUND NO. 1 IN THE APPEA L IS DISMISSED. 7. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFOR E US IN TERMS OF THE RESIDUARY GROUND NO.2 IN THE APPEAL, ACCORDINGL Y, THIS GROUND IS ALSO DISMISSED 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 11-03-2011 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 11-03-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI MOGHJIBHAI VIRSANGBHAI CHAUDHARY, AMBIKANAG AR, IDGAH ROAD, PALANPUR 2. ITO, WARD-3, PALANPUR 3. CIT CONCERNED 4. CIT(A)-XV, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD