Whether, On The Facts And In The Circumstances Ofthe Case And Also In The Light Of The Decision Of The Supremecourt In The Case Of Karmacharee Union v. Whether, On The Facts And In The Circumstances Ofthe Case, Was Not The Assessing Officer Right In Disallowingthe Assessee's Claim Of Exemption Under Section 10(

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER TUESDAY, THE 28TH OCTOBER 2008 / 6TH KARTHIKA 1930 I.T.A.No. 113 of 2008 ----------------------------- (ORDER DATED 21.4.2006 IN I.T.A.NO.461/COCH/2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN)(ASSESSMENT YEAR 1996-1997) .................. APPELLANT/APPELLANT/REVENUE: --------------------------------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY STANDING COUNSEL SRI.JOSE JOSEPH SRI.GEORGE K. GEORGE, SC FOR IT. RESPONDENT/ RESPONDENT/ASSESSEE: ------------------------------------------------------------ SHRI.T.K. GINARAJAN, (LIC DEVELOPMENT OFFICER), RAJ BHAVAN, KIZHAKKEKKARA, KOTTARAKKARA. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 28/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ------------------------------------------- I.T.A.No.113 of 2008 ------------------------------------------ Dated, this the 28[th] day of October, 2008 JUDGMENT H.L.Dattu, C.J. Revenue is before us in this Income Tax Appeal beingaggrieved by the orders passed by the Income Tax Appellate Tribunal,Cochin Bench, Cochin in I.T.A.No.461 of 2005 dated 21[st] April, 2006, forthe assessment year 1996-97. (2) By the impugned order, the appellate Tribunal has rejected the Revenue's appeal solely on the ground that the tax effect onthe disputed issue involved in the appeal is less than Rupees two lakhs.For rejecting the appeal, the Tribunal has relied upon the CircularInstructions issued by the Board in No.2/2005 dated 24[th] October, 2005. (3) The Revenue has framed the following questions of law for our consideration and decision. They are as under: “1. Whether on the facts and in the circumstances ofthe case, and also in the light of the CBDT instructionrelied on by the Tribunal should not the Tribunal haveconsidered the case on merits? 2. Whether on the facts and in the circumstances ofthe case, did not the Tribunal go wrong in applying thedecision of the Honourable High Court of Bombay in PitwaEngineering Ltd [(2005) 276 ITR 519] overlooking paragraph three of the CBDT instruction no.2/2005 dated24.10.2005 (Marked as Annexure-D) 3. Whether, on the facts and in the circumstances ofthe case and also in the light of the decision of the SupremeCourt in the case of Karmacharee Union Vs. Union of India243 ITR 143 wherein it was held that any type ofreimbursement by the employer is fully covered by section17(3)(ii) of the Income Tax Act, 1961 in as much as thepayment is not covered by any of the clauses of section 10as mentioned in the parenthetical clause of section 17(3)(ii),should not have the Tribunal have upheld the order of theAssessing Officer? 4. Whether, on the facts and in the circumstances ofthe case, is it not the duty of the assessee to adduceevidence to prove that the expenditure on additionalconveyance allowance claimed as exempt under section 10(14) of the Income tax Act had been actually incurred asheld by the Honourable High Court of Kerala in FrancoJohn Vs. Union of India (269 ITR 441). 5. Whether, on the facts and in the circumstances ofthe case, was not the Assessing Officer right in disallowingthe assessee's claim of exemption under section 10(14), asno proof for incurring actual expenditure was produced?” (4) Before the Tribunal, the Departmental representative hadonly stated that the tax effect on the disputed issue involved in the appealis less than Rupees two lakhs. It was not the stand of the Departmentalrepresentative, that, though the tax effect is less than Rupees two lakhs,the legal issue raised in the appeal is a substantial legal issue and itrequires to be considered by the Tribunal. 5. Whether, on the facts and in the circumstances ofthe case, was not the Assessing Officer right in disallowingthe assessee's claim of exemption under section 10(14), asno proof for incurring actual expenditure was produced?” (4) Before the Tribunal, the Departmental representative hadonly stated that the tax effect on the disputed issue involved in the appealis less than Rupees two lakhs. It was not the stand of the Departmentalrepresentative, that, though the tax effect is less than Rupees two lakhs,the legal issue raised in the appeal is a substantial legal issue and itrequires to be considered by the Tribunal. (5) In our view, it was expected of the Departmentalrepresentative to have brought to the notice of the Tribunal the importantlegal issue that was raised and canvassed in the appeal filed. If for anyreason, the Departmental representative accepts that the tax effect is lessthan Rupees two lakhs and if that statement is accepted by the Tribunal,we cannot find fault with the orders passed by the Tribunal. (6) In that view of the matter, we decline to entertain thisappeal. Accordingly this Income Tax Appeal is rejected. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE