Rc/177/2000 Of The Commissioner Of Income Tax Hyd v. G.n.kulasekhara Rao

THE HON’BLE SRI JUSTICE V.V.S.RAOANDTHE HON’BLE SRI JUSTICE R. KANTHA RAO REFERRED CASE No.177 of 2000 Dated:20.12.2011 Between: Commissioner of Income Tax,A.P.II, Hyderabad. …Applicant and Sri G.N.Kulasekhara Rao,Sircilla. …Respondent THE HON’BLE SRI JUSTICE V.V.S.RAOANDTHE HON’BLE SRI JUSTICE R. KANTHA RAO REFERRED CASE No.177 of 2000 ORDER:(Per Hon’ble Sri Justice V.V.S.Rao) The Commissioner of Income Tax, Hyderabad, got thefollowing question referred to the opinion of this Court under Section 256(1) of the Income Tax Act, 1961 (the Act). Whether on the facts and in the circumstances of thecase, the ITAT was correct in law in holding that the additionalconveyance allowance received by the assessee from hisemployer is entitled to exemption under Section 10(14) of theIT Act to the extent, the expenditure was actually incurred byhim on conveyance? The brief fact of the matter is as follows. The respondent/assessee was a Development Officer in the LifeInsurance Corporation of India. For the assessment year 1992-1993, he received additional conveyance allowance. Heclaimed the entire conveyance allowance as exempt under Section10(14) of the Act. The Assessing Officer disallowed the same. But, the Commissioner of Income Tax (Appeals) allowed theclaim. In the Revenue’s appeal, the Tribunal holding thatexemption under Section 10(14)(i) of the Act is available to theextent to which such allowance has actually been expended by theassessee, directed the Assessing Officer to allow exemptionaccordingly. Aggrieved by the same, the Revenue soughtreference of the question to this Court. During the course of arguments, the Junior StandingCounsel brought to our notice an unreported decision of this Courtin Commissioner of Income Tax, Visakhapatnam vP.V.Narasimaha Rao, Visakhapatnam(Referred Case No.117 of1992, dated 10.10.1996). Considering the similar question, thisCourt held as under. … In our view where amounts are paid to theemployees 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 thatit 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 afterhaving surveyed the actual expenditure necessary forperformance of the duty, grants monthly allowance generallyto all the employees, it is to be presumed that the entireexpenditure has been incurred for the purpose for which it hasbeen 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 employeeby an employer, the said presumption that the employee hasincurred the expenditure for which it is granted, will apply andit will not be necessary for the employees to submit accountsevery month to the employer and along with return to theassessing authority. If, in such matters, filing of the accountsand vouchers/receipts are insisted upon to claim exemptionunder Section 10(14) of the Act by the Income-tax authorities, it will lead to voidable waste of time and expenditure andwould serve no useful purpose but on the contrary it would becounter productive. In this view of the matter, we hold that theadditional conveyance allowance is exempt under Section10(14) of the Act. … The answer to the question referred to is therefore coveredby the judgment in P.V.Narasimha Rao. Accordingly, thereference is answered in the affirmative in favour of the assesseeand against the Revenue. The Referred Case is accordingly disposed of. _______________ (V.V.S.RAO, J) 20.12.2011vs ____________________(R.KANTHA RAO, J)