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TMI Blog2012 (5) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... h resulted in short deduction of tax. The shortfall and interest under Section 201 was computed and arrived at. The appeal was filed by the Life Insurance Corporation of India before the Commissioner of Appeal, Income Tax who held that the responsible persons of the Corporation have incorrectly allowed deduction for conveyance allowance and additional conveyance allowance suo motu which was beyond the purview of their jurisdiction. The Appellate Authority affirmed the order of the Assessing Officer against which the appeal was filed before the Income Tax Appellate Tribunal which too has been dismissed by the order which is impugned in this appeal. The Appellate Tribunal insofar as the amount regarding recovery of tax is concerned directed the Assessing Officers to reinvestigate into the matter after giving reasonable opportunity of being heard to the assessee and direct to produce the evidence of payment of tax by the Development Officers on the matter in question and to give finding thereafter. Insofar as the interest part was concerned, the appeal of the LIC was rejected. The assessee has come up in the appeal. Sri Rakesh Ranjan Agarwal learned counsel for the appellant in supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f learned counsel for the appellant contended that question whether the Development Officers were entitled for any deduction towards conveyance allowance or additional conveyance allowance was in the domain of the Assessing Officer and the Life Insurance Corporation or its responsible officers had no authority or jurisdiction to claim or show any deduction towards conveyance allowance or additional conveyance allowance. He submits that unless the Assessing Officer approved any deduction in the proceeding of assessment, LIC authorities had no jurisdiction suo motu to claim any deduction or show any deduction in Form-24. Sri Dhananjay Awasthi has placed reliance on the judgment of Kerela High Court in (2004) 269 ITR 0441 Franco John Vs. Union of India as well as the judgment of the Bombay High Court in 229 ITR 510 LIC Class-I Officer, Bombay vs. LIC and another. He submits that the said two authorities have clearly laid down that the conveyance allowance and additional conveyance allowance cannot ipso facto be claimed as permissible deduction and unless the two conditions as laid down in the judgment of Kerela High court in Franco John's case is proved, the deduction cannot be claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinary daily charges incurred by an employee on account of absence from his normal place of duty; (c) any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit: Provided that free conveyance is not provided by the employer; (d) .... incurred on a helper where such helper is engaged for the performance of the duties of an office or employment of profit; (e) ......... granted for encouraging the academic, research and training pursuits in educational and research institutions; (f). .............. granted to meet the expenditure incurred on the purchase or maintenance of uniform for wear during the performance of the duties of an office or employment of profit. (2)................" We have considered the submissions and perused the records. The case of the Corporation is that the conveyance allowance and additional conveyance allowance is allowance paid to the Development Officer against actual expenses incurred by the Development Officer in performance of their duties and the reimbursement is granted accordingly. It is submitted that the certificate-24 is only a proforma in which the details are submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose for which they were given wholly, necessarily and exclusively in the performance of duties. Therefore, the Life Insurance Corporation cannot be insisted for deduction of tax to be deducted at source to the extent such conveyance allowance/additional conveyance allowance is exempt under rule 2BB and further such minimum limit is set from time to time. The ultimate liability of claiming exemption and proving the same is on the employee-assessees, i.e. the Development Officers....." The ultimate responsibility being of the assessee i.e. Development Officer it is for the income tax authorities while computing the income of the Development Officer to allow or disallow the particular deduction claimed as conveyance or additional conveyance allowance but, due to above reason it cannot be said that the Form-24 which has been submitted by the LIC is incorrect or an obligation is cast on the Life Insurance Corporation of India to deduct the tax at source. In case the allowances were of such a nature which could not have been claimed as deduction under Section 10(14), obviously, the statutory liability would have been there of the Corporation to deduct the tax at source but present is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricted by the instructions issued by the Central Board of Direct Taxes from time to time. Therefore, we hold that the Development Officers in the Life Insurance Corporation are entitled to claim exemption under Section 10(14) of the Act in respect of conveyance allowance/additional conveyance allowance upon satisfying the conditions that such allowances have actually been spent for the purpose of which they were given wholly, necessarily and exclusively in the performance of duties. Therefore, the Life Insurance Corporation cannot be insisted for deduction of tax to be deducted at source to the extent such conveyance allowance/additional conveyance allowance is exempt under Rule 2BB and further such minimum limit is set from time to time. The ultimate liability of claiming exemption and proving the same is on the employee-assessee, i.e. the Development Officers. The Tribunal after detailed discussion on the contentions of the parties and also keeping in view the fact that the Revenue had not challenged the earlier orders passed by the Tribunal on the same issue, pertaining to different offices of the LIC, upheld the order passed by the Commissioner of Income tax (Appeals) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not. The said is the main distinguishing feature in the present case hence, the above judgment was on its own fact and does not help the department in the present case. In Franco John's case (supra) the petitions were filed by Association of Officers challenging the periodical circulars issued by LIC providing guidelines for deduction of income tax at source on additional conveyance allowance. The Kerela High Court considered the provisions of Section 10(4) of the Income Tax Act and Rule 2BB of the Income Tax Rules. After considering the aforesaid provisions, it was held that actual expenditure incurred by the employee and reimbursed by the employer on being satisfied that expenditure is incurred towards conveyance in the performance of duty of office shall not attract income tax. Thus, the judgment of Kerela High Court in Franco John's case do support the appellant's case that conveyance allowance and additional conveyance allowance having been granted to the Development Officer as reimbursement for expenses incurred while on duty. There was no occasion for deduction of tax at source. It is useful to quote the following observation of the Kerela High Court:- "The exemption p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the guidelines issued by the LIC in that context. It is also relevant to note that Rule 2BB (1(c) was also considered in the said case referring to the Bombay High Court judgment as noted above. It is useful to quote the following observations in the said judgment made by Kerela High Court:- "...............These circulars or guidelines are not statutory and have no force of law. It only serves as guidelines from management to subordinate officers; particularly to salary disbursing department and can neither bind the Income-tax Department, nor the LIC Development Officers. The administration of the Income-tax Act is by statutory authorities, who have been given definite powers. While the Central Board of Direct Taxes has jurisdiction under Section 119 to issue circulars for the administration of a statute, it cannot authorise employers to issue circulars on behalf of the Central Board of Direct Taxes. The circulars issued by the Executive Director of the LIC do not have the force of circulars issued by the Central Board of Direct Taxes under section 119 of the Act. Of course, since the LIC has operations all over India, it is up to them to approach the Central Board of Direct Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved facts of each assessee (LIC Development Officer) and therefore the issue cannot be decided by this court in Ops filed by representative bodies. ........" We are of the view that the view taken by the Assessing Officer and confirmed by the appellate authority and the Tribunal that there was statutory obligation of the Corporation to deduct the tax at source in respect of conveyance allowance and additional conveyance allowance cannot be supported and we are of the view that in the facts and circumstances of the case, conveyance allowance and additional conveyance allowance received by the Development Officers of the Corporation was permissible deduction under Section 10(14) of the Income Tax Act. We answer the said question in favour of the assessee with one rider that it is always open for the department while considering the claim of the individual assessee i.e. Development Officer to consider and decide whether the deductions claimed as conveyance allowance or additional conveyance allowance are permissible deduction or not. In view of the above, this appeal is allowed answering the above question in favour of the assessee as above. It goes without saying that we having al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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