9911796707
TMI Blog2003 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... 1987, produced in that O. P. Pending this O. P., the very same petitioner filed O. P. No. 33745 of 2001 challenging later circular, produced as exhibit P2 in that O. P., which was issued in modification of the earlier circular. O. P. No. 7153 of 2000 is filed by another organisation of the LIC Development Officers challenging the same circulars and for the same relief. I have heard counsel for the petitioners and standing counsel for the Income-tax Department and counsel for the LIC. The petitioners' contention is that additional conveyance allowance paid to them qualifies for exemption under section 10(14) of the Income-tax Act, 1961, and therefore the direction of the Executive Director of the LIC to deduct income-tax in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 119 or under any other provisions of the Act. I do not think the exemptions and deductions contemplated in the circular issued by the Executive Director, admittedly based on the volume of business transacted by the Development Officers, are consistent with the provisions of the Income-tax Act and Rules. The relevant section, namely, section 10(14) and rule 2BB are extracted hereunder for easy reference: "(14) (i) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, as may be prescribed, to the extent to which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uties of an office or employment of profit; (e) any allowance granted for encouraging the academic, research and training pursuits in educational and research institutions; (f) any allowance 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. Explanation.-. . ." The exemption provided under section 10(14) is not limited to additional conveyance allowance or conveyance allowance. It provides for exemption for special allowances other than perquisites defined under section 17(2) of the Income-tax Act, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of actual expenditure for conveyance incurred by each Development Officer and reimbursement to him by the employer, namely, the LIC of India. The issue arose in Madras where the LIC's return claiming exemption from the deduction of income-tax on additional conveyance allowance was rejected by the Assessing Officer and in turn by the Commissioner of Income-tax. When this was challenged before the Madras High Court, the Madras High Court in the decision in LIC of India v. CIT [2000] 245 ITR 224, referred the matter back to the Department for deciding the issue with reference to rule 2BB of the Income-tax Rules as the same was not considered by the Department in the proceedings impugned in court. The finding of the learned single judge in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act and in that event the Central Board of Direct Taxes will issue circular, or otherwise, since all the LIC Development Officers are assessees they are free to make individual applications before the Assessing Officer concerned in terms of section 197 and obtain certificate which will be followed by the LIC in regard to tax deduction at source. I do not think there is any need for this court to go into the correctness of the two impugned circulars issued by the Executive Director of the LIC of India on deduction of income-tax, which as already held serves only as guidelines to subordinate officers. It is for the Income-tax Department to scrutinise the correctness of TDS made either while considering the LIC's TDS returns or while as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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