THE COMMISSIONER OF INCOME TAX HYD. V. Y.NAGABHUSHANAM

RC/47/1999

AI Insights

The case revolves around a dispute concerning the tax exemption status of an additional conveyance allowance received by Shri Y. Nagabhushanam, a Development Officer at LIC of India, from his employer. For the assessment year 1993-1994, Nagabhushanam claimed the additional conveyance allowance as exempt under Section 10(14) of the Income Tax Act, 1961. The Assessing Officer initially disallowed this claim, a decision upheld by the Commissioner of Income Tax (Appeals). However, the Income Tax Appellate Tribunal (ITAT) reversed this decision, granting the exemption, which led the Revenue to seek a reference to the High Court. The court, referencing a similar case, upheld the ITAT's decision, affirming the exemption of the allowance under the specified section of the Act.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 681169 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 30-11-2011
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Visakhapatnam v P.V. Narasimha Rao, Visakhapatnam (Referred Case No.117 of 1992, dated 10.10.1996)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Additional Conveyance allowance; Exemption; Income Tax; Section 10(14)
• Section: 10(14); 256(1)

Judgement Text

"THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA REFERRED CASE No.47 OF 1999 Dated:30.11.2011 Between: The Commissioner of Income Tax, Andhra Pradesh – II, Hyderabad .. Applicant And Shri Y.Nagabhushanam, Development Officer, LIC of India, Banswada .. Respondent THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA REFERRED CASE No.47 OF 1999 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) This is a reference under Section 256(1) of the Income Tax Act, 1961 (the Act). The question referred to for the opinion of this Court is as follows. Whether, on the facts and in the circumstances of the case, the ITAT was right in holding that the additional conveyance allowance received by the assessee from his employer was entitled to exemption u/s.10(14) of the I.T. Act? The brief fact of the matter is as follows. The respondent/assessee was a Development Officer in the Life Insurance Corporation of India. For the assessment year 1993-1994, he received additional conveyance allowance. He claimed the conveyance allowance as exempt under Section 10(14) of the Act. The Assessing Officer disallowed the same, which was confirmed by the Commissioner of Income Tax (Appeals). On appeal, the Tribunal directed the assessing officer to allow exemption to the assessee in respect of additional conveyance allowance under Section 10(14) of the Act. Aggrieved by the same, the Revenue sought the reference of the question to this Court. During the course of arguments, the Junior Standing Counsel brought to our notice an unreported decision of this Court in Commissioner of Income Tax, Visakhapatnam v P.V .Narasimaha Rao, Visakhapatnam (Referred Case No.117 of 1992, dated 10.10.1996). Considering the similar question, this Court held as under. … In our view where amounts are paid to the employees by an employer to meet expenses wholly , necessarily and exclusively for the performance of the duties, such amounts can be exempted to the extent it is shown that it has been incurred for the purpose for which it was granted. In the case of employees of the State or Corporations, whether statutory or otherwise, where the employer after having surveyed the actual expenditure necessary for performance of the duty , grants monthly allowance generally to all the employees, it is to be presumed that the entire expenditure has been incurred for the purpose for which it has been granted, for it is not incurred for which it has been given, it would entail disciplinary action against the employee. Unless such a case has been initiated against an employee by an employer, the said presumption that the employee has incurred the expenditure for which it is granted, will apply and it will not be necessary for the employees to submit accounts every month to the employer and along with return to the assessing authority . If, in such matters, filing of the accounts and vouchers/receipts are insisted upon to claim exemption under Section 10(14) of the Act by the Income-tax authorities, it will lead to voidable waste of time and expenditure and would serve no useful purpose but on the contrary it would be counter productive. In this view of the matter, we hold that the additional conveyance allowance is exempt under Section 10(14) of the Act. … The answer to the question referred to is therefore covered by the judgment in P.V .Narasimha Rao . Accordingly, the reference is answered in the affirmative in favour of the assessee and against the Revenue. The Referred Case shall stand disposed of accordingly. ________________ (V.V.S. RAO, J) _____________________ (B.N.RAO NALLA, J) 30.11.2011 KH "