City compensatory allowance - Whether exempt under clause (14) - Income Tax - 89/1972

Circular No. 89 Dated 23/6/1972 City compensatory allowance - Whether exempt under clause (14) The Bombay Bench of the Income-tax Appellate Tribunal in their order, dated 29-12-1971 in the case of D.R. Pathak v. ITO held that the "city compensatory allowance" granted to a Government servant is exempt under section 10 (14)/ 16 (v). On legal advice received, the Tribunal's decision has not been accepted by the Income-tax Department and it has challenged in appeal. Till a judicial verdict is available the city compensatory allowance may continue to be treated as assessable, the employee-assessees and employers responsible for deduction of tax at source from salaries paid may take note of this position accordingly. Circular : No. 89 [F. No. 279/178/72-ITJ], dated 23-6-1972 .