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2018 (10) TMI 374 - HC - Income TaxReversal of TDS having regard to reimbursement of allowance by LIC - Benefit of section 89(1) - distribution of income - TDS claim from the amounts paid by LIC to the extent it was applied to allowances meant to reimbursed - Held that:- This Court is of the opinion that as to whether a particular kind of expenditure is necessary and is exclusively incurred or to be incurred in the function intimately connected with the employment requires to be inquired into especially in the context of commercial organisations like the LIC. The Development Officers are charged with the responsibility of increasing the business of the Corporation in the areas under their supervision. Apparently, this involves a range of duties that also calls for extensive travelling within the city or touring outside the city including in rural areas. The circulars referring to the terms of the employment clearly indicate that LIC expects such Development Officers to routinely travel within the city and also undertake journey outside city periodically. Given these impediments, the analogy which the DCIT appears to have drawn by comparing the chart, which referred to Section 10(14)(ii) of the Act, and granting relief limited to the extent the chart indicated, was not appropriate. In this regard this Court is of the opinion that the decision of the employer to grant the allowance either on actual reimbursement after verifying it or spare itself the added responsibility of verifying it but based upon observing a general pattern give a lump-sum allowance, which either covers it fully or in part leaving the rest to be reimbursed, if a higher amount was incurred, was a business or commercial decision. The stereotypical approach adopted by the DCIT was clearly not warranted. What the Central Government or the State Government might permit their employees or officers under the employment or having authority of law cannot blindly be applied to other organisations – even to the Public Sector Units which are expected to be organised on commercial pattern and have entire different objectives. The petitioners are entitled to succeed. The respondents, DCIT and the concerned Assessing Officers are hereby directed to facilitate the working out of the reversal of the TDS having regard to the circulars of the LIC (especially circular of 18.03.1991) with respect to the reimbursement of three items i.e. fixed conveyance allowance, additional conveyance allowance and expenses under the head “reimbursement of expenses scheme” . The LIC shall also ensure that the amounts withheld from the employee and kept in a fixed deposit are reimbursed having regard to the orders of the Assessing Officer. Towards such reimbursement, the TDS amounts, if any, shall receive the benefit of spread out under Section 89 of the Act.
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