Rc/47/1999 Of The Commissioner Of Income Tax Hyd v. Y.nagabhushanam

THE HON’BLE SRI JUSTICE V.V.S.RAOAND 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.RAOANDTHE 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 theIncome Tax Act, 1961 (the Act). The question referredto for the opinion of this Court is as follows. Whether, on the facts and in the circumstances ofthe case, the ITAT was right in holding that theadditional conveyance allowance received by theassessee from his employer was entitled toexemption u/s.10(14) of the I.T. Act? The brief fact of the matter is as follows. Therespondent/assessee was a Development Officer in theLife Insurance Corporation of India. For theassessment year 1993-1994, he received additionalconveyance allowance. He claimed the conveyanceallowance as exempt under Section 10(14) of the Act. The Assessing Officer disallowed the same, which wasconfirmed by the Commissioner of Income Tax(Appeals). On appeal, the Tribunal directed theassessing officer to allow exemption to the assessee inrespect of additional conveyance allowance underSection 10(14) of the Act. Aggrieved by the same, theRevenue sought the reference of the question to thisCourt. During the course of arguments, the JuniorStanding 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 theemployees by an employer to meet expenseswholly, necessarily and exclusively for theperformance of the duties, such amounts can beexempted to the extent it is shown that it hasbeen incurred for the purpose for which it wasgranted. In the case of employees of the Stateor Corporations, whether statutory orotherwise, where the employer after havingsurveyed the actual expenditure necessary forperformance of the duty, grants monthlyallowance generally to all the employees, it isto be presumed that the entire expenditure hasbeen incurred for the purpose for which it hasbeen granted, for it is not incurred for which ithas been given, it would entail disciplinaryaction against the employee. Unless such acase has been initiated against an employee byan employer, the said presumption that theemployee has incurred the expenditure forwhich it is granted, will apply and it will not benecessary for the employees to submit accountsevery month to the employer and along withreturn to the assessing authority. If, in suchmatters, filing of the accounts andvouchers/receipts are insisted upon to claimexemption under Section 10(14) of the Act bythe Income-tax authorities, it will lead tovoidable waste of time and expenditure andwould serve no useful purpose but on thecontrary it would be counter productive. In thisview of the matter, we hold that the additionalconveyance allowance is exempt under Section10(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 theaffirmative in favour of the assessee and against theRevenue. The Referred Case shall stand disposed ofaccordingly. 30.11.2011 KH ________________ (V.V.S. RAO, J) _____________________ (B.N.RAO NALLA, J)