Smt. Kusum Singh Mahadele, Bhopal V. The ACIT 1(1), Bhopal

ITA 236/IND/2013

• Counselvise Citation: 23622714 RSA 2013
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: R N GUPTA
• Section: 10(14)

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AEXPM 9447 H I.T.A.NO. 236/IND/2013 A.Y. : 2005-06 SMT. KUSUM SINGH MAHADELE 137, PHASE-III, RIVIERA TOWN, MATA MANDIR, T.T. NAGAR, BHOPAL VS. THE ACIT 1 (1) BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI R.N. GUPTA, CA RESPONDENT BY : SHRI R.A. VERMA, SR DR DATE OF HEARING : 19 .1 1 .2013 DATE OF PRONOUNCEMENT : 20 . 11 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER PASSED BY THE CIT(A), DATED 06-02-2013 FOR THE ASSE SSMENT YEAR 2005-06, IN THE MATTER OF ORDER PASSED U/S 14 3(3) OF THE INCOME-TAX ACT, 1961. FOLLOWING THREE GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE. SMT.KUSUM SINGH MAHADELE A.Y. 2005-06 2 PAGE 2 OF 6 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CLAIM OF EXEMPTION OF VARIOUS ALLOWANCES RECEIVED BY THE ASSESSEE IS PROPER AND LAWFUL, AND THEREFORE, THE SAME BY KINDLY ALLOWED AS CLAIMED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ERRED AND NOT JUSTIFIED IN NOT ALLOWING THE STATUTORY EXEMPTION U/S 10(17)(III) AT RS. 24,000/-. THEREFORE, THE SAID STATUTORY EXEMPTION U/S 10(17)(III) AT RS. 24,000/- BE ALLOWED. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, IT BE HELD THAT THE CONSTITUENCY ALLOWANCE IN REALITY, AS AN ALLOWANCE GRANTED TO ASSESSEE, TO MEET THE EXPENDITURE INCURRED ON CONVEYANCE IN PERFORMANCE OF DUTIES OF AN OFFICE AND THEREFORE, THE SAID ALLOWANCE IS EXEMPT UNDER RULE 2BB(1) TO THE EXTENT IT IS INCURRED. THUS THE CLAIM OF THE ASSESSEE OF RS. 96,000/- IS LAWFUL AND JUSTIFIED AND, THEREFORE, BE ALLOWED. 2.1 RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS P ERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A MEMBE R OF STATE LEGISLATURE (MLA). DURING THE YEAR, HE RECEIVED THE CONSTITUENCY ALLOWANCE OF RS. 96,000/- WHICH WAS CL AIMED AS A DEDUCTION ON THE GROUND THAT THIS ALLOWANCE WAS G RANTED TO MEET THE COST OF EXPENDITURE ON ACCOUNT OF TOUR IN THE SMT.KUSUM SINGH MAHADELE A.Y. 2005-06 3 PAGE 3 OF 6 CONSTITUENCY FROM ONE PLACE TO ANOTHER AND ALSO TO SPEAK WITH VARIOUS VILLAGE HEADS, GOVT. OFFICERS ETC. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEE'S CONTENTION AND ADDED THE SAME. THE AO ALSO DID NOT ALLOW STATUTORY EXEMPTION U/S 10(17 )(III) OF THE ACT AT RS. 24,000/-. THE ACTION OF THE AO WAS CONFI RMED BY THE LD. CIT(A) AND THE ASSESSEE IS IN FURTHER APPEAL BE FORE US. 2.2 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FO UND FROM RECORD THAT THE ASSESSEE IS A MLA. DURING THE YEAR, HE RECEIVED CONSTITUENCY ALLOWANCE OF RS. 96,000/- AS A MEMBER OF STATE LEGISLATURE. THIS ALLOWANCE WAS GRANTED TO MEET THE EXPENDITURE IN TOURING THE CONSTITUENCY DURING THE PERIOD OF OFFICE. FOR CLAIMING EXEMPTION FROM THE VARIOUS ALL OWANCE BY MLA, THE RELEVANT PROVISIONS ARE CONTAINED IN SECTI ON 10(17) AND SECTION 10(14) OF THE INCOME TAX ACT.THE I.T.A. T. VISHAKHAPATTANAMA BENCH IN THE CASE OF DR. NARENDRA KUMAR ORDER DATED 28-07-2010 IN ITA NO.200 TO 204 AND 181 TO 183/VIZAG/2010 IN PARA 21 OF THEIR ORDER HELD THAT U/S 10(17), THE LEGISLATURE HAS PRESCRIBED THE PARTICUL AR LIMIT UPTO WHICH THE ALLOWANCES ARE TO BE EXEMPTED FROM THE TO TAL INCOME SMT.KUSUM SINGH MAHADELE A.Y. 2005-06 4 PAGE 4 OF 6 OF THE ASSESSEE BUT SECTION 10(14) IS TO BE READ WI TH RULE 2BB OF THE I T RULES AND ONLY THOSE ALLOWANCES WHICH AR E TO BE ALLOWED TO BE EXEMPTED FROM THE TOTAL INCOME OF THE ASSESSEE WHICH ARE SPECIFICALLY MENTIONED IN RULE 2BB SUBJEC T TO PROVE OF ITS BEING SPENT FOR THE PURPOSE FOR WHICH IT IS RECEIVED OR GRANTED. 2.3 IN PARA 18, THE HON'BLE BENCH ALSO HELD THAT THOUGH SECTION 10(17), THE LEGISLATURE HAS RESTRICTED THE EXEMPTION OF ALL OTHER ALLOWANCES UPTO RS. 2,000/- P.M.YET THROU GH VARIOUS JUDICIAL PRONOUNCEMENT IT HAS BEEN HELD THAT THE ML A ARE ENTITLED TO TAKE THE BENEFIT OF SECTION 10(14) ALSO . WE, THEREFORE, OF THE VIEW THAT ACCORDING TO THE RULE 2 BB, READ WITH SECTION 10(14) OF THE ACT, ONLY THE CONVEYANCE ALLOWAWNCE OR THE CLERICAL ALLOWANCE ARE REQUIRED TO BE EXEMPT ED, SUBJECT TO PROVE THAT IT WAS INCURRED IN PERFORMANCE OF DUT IES OF AN OFFICE. 2.4 APPLYING THE PROPOSITION OF LAW AS DISCUSSED AB OVE TO THE FACTS OF THE INSTANT CASE, WE FOUND THAT THE ASSESS EE IS ELIGIBLE FOR DEDUCTION/ EXEMPTION OF RS. 24,000/- @ RS. 2,00 0/- PER SMT.KUSUM SINGH MAHADELE A.Y. 2005-06 5 PAGE 5 OF 6 MONTH U/S 10(17)(III) OF THE ACT FOR THE CONSTITUE NCY ALLOWANCE RECEIVED BY HER IN VIEW OF THE NOTIFICATION NO.1043 0 DATED 3- 10-1997 READ WITH NOTIFICATION NO.11409 DATED 21-0 6-2000. THE NOTIFICATION NO.S.O. 143(E) DATED 21-02-1989 PR OVIDES THAT ANY ALLOWANCE GRANTED TO MEET THE COST OF TRAV EL ON TOUR IS ALSO AN ITEM FALLING U/S 10(14) OF THE INCOME TAX A CT. WE FURTHER FOUND THAT THE ASSESSEE IS ALSO ELIGIBLE FO R THE DEDUCTION/ EXEMPTION OF THE CONSTITUENCY ALLOWANCE OVER AND ABOVE RS. 24,000/- U/S 10(14) OF THE INCOME TAX ACT BECAUSE THE TRUE NATURE OF THE CONSTITUENCY ALLOWANCE IS IN FACT IN THE NATURE OF AN ALLOWANCE GRANTED TO MEET THE EXPENDIT URE INCURRED ON CONVEYANCE IN PERFORMANCE OF THE DUTIES OF AN OFFICE OF MLA. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR A FURTHER EXEMPTION UPTO RS. 96,000/- UNDER RULE 2BB(1). SO FAR AS THE PROOF OF INCURRING EXPENDITURE IS CONCERNED, CO NSIDERING THE VAST AREA OF THE CONSTITUENCY AND TOURING THE S AME IN A REGULAR MANNER, EXPENDITURE ON RUNNING AND MAINTENA NCE OF VEHICLES SHOULD BE CONSIDERED AS REASONABLE AND GEN UINE. SMT.KUSUM SINGH MAHADELE A.Y. 2005-06 6 PAGE 6 OF 6 3.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH NOVEMBER, 2013. RNM *