SHRI. M K VISHNU PRASAD, CHENNAI V. ITO COMPANY WRD II (1), CHENNAI

ITA 508/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4979 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 13-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: S SRIDHAR
• Section: 10(14); 10

Judgement Text

, (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL, B (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER] ./I.T.A. NO.508/CHNY/2018 / ASSESSMENT YEAR : 2011-2012. M.K. VISHNU PRASAD, 17, 1 ST STREET, EAST ABHIRAMAPURAM, CHENNAI 600 004. [PAN AAOPK 4279R] VS. THE INCOME TAX OFFICER, COMPANY WARD II(1) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI. B. SAGADEVAN, JCIT. /DATE OF HEARING : 25-07-2018 !' /DATE OF PRONOUNCEMENT : 01-08-2018 % / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, WHICH IS D IRECTED AGAINST AN ORDER DATED 17.11.2017 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-13, CHENNAI, IT IS AGGRIEVED ON DISALLO WANCE OF CLAIM OF EXEMPTION U/S.10(14) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT) ON POSTAL ALLOWANCE AND TRANSPORT ALLOWANCE RECEIV ED. ITA NO.508 /CHNY/2018 :- 2 -: 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSE E WAS A MEMBER OF TAMIL NADU LEGISLATIVE ASSEMBLY DURING T HE RELEVANT PREVIOUS YEAR. AS PER THE LD. AUTHORISED REPRESENT ATIVE, ASSESSEE HAD RECEIVED SALARY OF E6,00,000/- FROM STATE LEGISLATI VE ASSEMBLY, WHICH INCLUDED CONSTITUENCY ALLOWANCE OF E60,000/-, POST AL ALLOWANCE E30,000/- AND TRANSPORT ALLOWANCE OF E2,40,000/-. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT LD. ASSESSI NG OFFICER ERRONEOUSLY HELD THAT ASSESSEE WAS ENTITLED ONLY F OR CLAIM OF EXEMPTION IN RELATION TO CONSTITUENCY ALLOWANCE OF E60,000/- ONLY. AS PER THE LD. AUTHORISED REPRESENTATIVE, LD. ASSESSI NG OFFICER DISALLOWED EXEMPTION CLAIMED BY THE ASSESSEE ON POSTAL ALLOWAN CE OF E30,000/- AND TRANSPORT ALLOWANCE OF E2,40,000/-. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT ASSESSEES APPEA L BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS ALSO NOT SUCCESSFUL. AS PER THE LD. AUTHORISED REPRESENTATIVE, THOUGH THE A SSESSEE POINTED OUT THAT DURING THE PERIOD FOR WHICH HE RECEIVED SALARY RELEVANT PREVIOUS YEAR, HE WAS A MEMBER OF LEGISLATIVE ASSEMBLY, THIS WAS NOT ACCEPTED BY THE LD.CIT(COMMISSIONER OF INCOME TAX (APPEALS)) . ACCORDING TO LD. AUTHORISED REPRESENTATIVE, ASSESSEE HAD RECEIVE D ALLOWANCE IN HIS CAPACITY AS AN MLA. SUBMISSION OF THE LD. AUTHORIS ED REPRESENTATIVE WAS THAT ASSESSEE WAS ENTITLED FOR EXEMPTION U/S.10 (14) OF THE ACT. RELYING ON RULE 2BB OF THE INCOME TAX RULES, 1962, LD. COUNSEL ITA NO.508 /CHNY/2018 :- 3 -: SUBMITTED THAT ALLOWANCES PRESCRIBED FOR THE PURPOS E OF SECTION 10(14) INCLUDED TRANSPORT ALLOWANCE. LD. AUTHORISED REPR ESENTATIVE FAIRLY ADMITTED THAT THE SAID RULE DID NOT COVER POSTAL AL LOWANCE. ACCORDING TO HIM, THOUGH POSTAL ALLOWANCE MIGHT NOT BE ELIGI BLE FOR EXEMPTION U/S.10(14) OF THE ACT, TRANSPORT ALLOWANCE OF E2,40 ,000/- WAS ENTITLED TO SUCH EXEMPTION. 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT ASSESSEE WAS ONLY AN EX-MLA AND THEREFORE WHAT APPL IED WAS SECTION 10(17) OF THE ACT AND NOT SECTION 10(14) OF THE ACT . 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. FIRST ISSUE BEFORE ME, WHETHER ASSESSEE WAS AN EX-MLA OR MLA DURING THE RELEVANT P REVIOUS YEAR. IF THE ASSESSEE WAS AN EX-MLA, HE WOULD NOT HAVE RECEI VED SALARY FROM THE LEGISLATIVE ASSEMBLY. HE WOULD HAVE BEEN AT THE BEST ELIGIBLE FOR PENSION UNDER THE RULES APPLICABLE FOR THE MEMBER S OF THE ASSEMBLY. LD. ASSESSING OFFICER HAS IN THE ASSESSMENT ORDER I TSELF MENTIONED RECEIPT OF SALARY OF E6,00,000/- BY THE ASSESSEE FROM STATE LEGISLATIVE ASSEMBLY. HENCE, IN MY OPINION, ASSESSE E WAS ENTITLED TO ITA NO.508 /CHNY/2018 :- 4 -: CLAIM THE BENEFITS AVAILABLE TO HIM U/S.10(14) OF THE ACT. SECTION 10(14) OF THE ACT, WHICH IS APPOSITE HERE IS REPROD UCED HEREUNDER:- (14) (I) ANY SUCH SPECIAL ALLOWANCE OR BENEFIT, NOT BEING IN THE NATURE OF A PERQUISITE WITHIN THE MEAN ING OF CLAUSE (2) OF SECTION 17, SPECIFICALLY GRANTED T O MEET EXPENSES WHOLLY, NECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORMANCE OF THE DUTIES OF AN OFF ICE OR EMPLOYMENT OF PROFIT, AS MAY BE PRESCRIBED, TO T HE EXTENT TO WHICH SUCH EXPENSES ARE ACTUALLY INCURRED FOR THAT PURPOSE; (II) ANY SUCH ALLOWANCE GRANTED TO THE ASSESSEE EIT HER TO MEET HIS PERSONAL EXPENSES AT THE PLACE WHERE TH E DUTIES OF HIS OFFICE OR EMPLOYMENT OF PROFIT ARE ORDINARILY PERFORMED BY HIM OR AT THE PLACE WHERE H E ORDINARILY RESIDES, OR TO COMPENSATE HIM FOR THE INCREASED COST OF LIVING, AS MAY BE PRESCRIBED AND TO THE EXTENT AS MAY BE PRESCRIBED: PROVIDED THAT NOTHING IN SUB-CLAUSE (II) SHALL APPL Y TO ANY ALLOWANCE IN THE NATURE OF PERSONAL ALLOWANCE GRANTED TO THE ASSESSEE TO REMUNERATE OR COMPENSATE HIM FOR PERFORMING DUTIES OF A SPECIAL NATURE RELAT ING TO HIS OFFICE OR EMPLOYMENT UNLESS SUCH ALLOWANCE I S RELATED TO THE PLACE OF HIS POSTING OR RESIDENCE. ALLOWANCES PRESCRIBED FOR THE PURPOSES OF CLAUSE (1 4) OF SECTION 10 IS GIVEN IN RULE 2BB WHICH IS REPRODUCED HEREUNDER:- (1) FOR THE PURPOSES OF SUB-CLAUSE (I) OF CLAUSE (14) OF SECTION 10, PRESCRIBED ALLOWANCES, BY WHATEVER NAME CALLED, SHALL 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 M EET ITA NO.508 /CHNY/2018 :- 5 -: THE ORDINARY DAILY CHARGES INCURRED BY AN EMPLOYEE ON ACCOUNT OF ABSENCE FROM HIS NORMAL PLACE OF DUTY; (C) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE INCURRED 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 INCURRED ON A HELPER WHERE SUCH HELPER IS ENGAGED F OR THE PERFORMANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMEN T OF PROFIT; (E) ANY ALLOWANCE GRANTED FOR ENCOURAGING THE ACADE MIC, RESEARCH AND TRAINING PURSUITS IN EDUCATIONAL AND RESEARCH INSTITUTIONS; (F) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE INCURRED ON THE PURCHASE OR MAINTENANCE OF UNIFORM FOR WEAR DURING THE PERFORMANCE OF THE DUTIES OF AN OFF ICE OR EMPLOYMENT OF PROFIT. EXPLANATION.-- FOR THE PURPOSE OF CLAUSE (A), 'ALLO WANCE GRANTED TO MEET THE COST OF TRAVEL ON TRANSFER' INC LUDES ANY SUM PAID IN CONNECTION WITH TRANSFER, PACKING A ND TRANSPORTATION OF PERSONAL EFFECTS ON SUCH TRANSFER . ALLOWANCES MENTIONED IN RULE 2BB DEFINITELY COVERED TRANSPORT ALLOWANCE OF E2,40,000/- RECEIVED BY THE ASSESSEE. HOWEVER, POSTAL ALLOWANCE IS NOT COVERED BY THE SAID RULE. HENCE, IN MY OPINION, ASSESSEE WAS ELIGIBLE FOR CLAIMING EXEMPTION ON TH E TRANSPORT ALLOWANCE OF E2,40,000/- RECEIVED BY HIM BUT NOT ON THE POSTAL ALLOWANCE OF E30,000/-. I THEREFORE DIRECT THE LD . ASSESSING OFFICER TO ITA NO.508 /CHNY/2018 :- 6 -: ALLOW ASSESSEE A FURTHER EXEMPTION OF E2,40,000/- ON THE TRANSPORT ALLOWANCE, WHILE SUSTAINING THE DISALLOWANCE OF TH E POSTAL ALLOWANCE OF E30,000/- ORDERS OF THE LOWER AUTHORITIES TO THI S EXTENT IS SET ASIDE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED ON THE 1 ST DAY OF AUGUST, 2018, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 1 ST AUGUST, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF