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TMI Blog1983 (9) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by him as a Judge was not taxable under the Income-tax Act, 1961 ('the Act'). His plea was, however, not accepted by the ITO. He had received a salary of Rs. 12,133. The ITO allowed deduction of Rs. 1,000 from this amount under section 16(i) of the Act. He, thus, brought to tax only the balance of Rs. 11,133. 3. The assessee appealed to the Commissioner (Appeals). The first contention before the latter was that the salary received by the assessee as a Judge of the High Court was not taxable under the Act. This plea was not accepted. His second contention before the Commissioner (Appeals) was that the ITO was not legally correct in allowing only Rs. 1,000 under section 16(i). The claim of the assessee was that he was entitled to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis provided hereunder, namely :-- (a) where the salary derived from such 20 per cent of such salary ;employment does not exceed Rs. 10,000 (b) where the salary derived from such Rs. 2,000 plus 10 per cent of the employment exceeds Rs. 10,000 amount by which such salary exceeds Rs. 10,000 or Rs. 3,500, whichever is less : Provided that-- (i) where the assessee is in receipt of a conveyance allowance from his employer ; or (ii) where any motor-car, motor cycle, scooter or other moped is provided to the assessee by his employer for use by the assessee, otherwise than wholly and exclusively in the performance of his duties ; or (iii) where one or more motor-cars are owned or hired by the employer of the assessee and the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll like to quote it in full as under : "Instruction No. 1088 : XXIII/1/48 -- Deduction of tax at source from salaries of High Court Judges -- Exemption under section 10(14) of the Income-tax Act, 1961 in respect of conveyance allowance paid to High Court Judges : Reference is invited to Circular No. 196 [F.No. 275/47/76-IT(J), dated 31-3-1976]. The department has received a reference from the High Court Judges regarding the applicability of the above circular in respect of the conveyance allowance paid to the High Court Judges under section 22B of the High Court Judges (Conditions of Service) Amendment Act. Under this provision every Judge is entitled to a conveyance allowance of Rs. 300 per month subject to the maintenance of motor-car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to enquire whether conveyance expenses to the extent of the allowance had actually been incurred. The furnishing of a separate certificate in this regard was also dispensed with. Once the conveyance allowance is treated as failing within section 10(14), it amounts to reimbursement of expenses wholly, necessarily and exclusively incurred in the performance of the duties of the office of a Judge and does not form part of his total income (see circular No. 196, In view of the clear language of the Board's instruction, the question of applying the Explanation to section 10(14) also does not arise. 8. We will now quote below the Board's letter dated 4-7-1981, addressed to FICCI, already referred to above : "Grant of standard deduction under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CBDT. Since the learned departmental representative was serious about it, we will like to deal with it also to put an end to the controversy. 10. The issue regarding the binding nature of the circulars had at first arisen before the Hon'ble Supreme Court in the case of Navnit Lal C. Javeri v. K.K. Sen, AAC [1965] 56 ITR 198. The Court observed as under : ". . . It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that the circular was binding on the ITO. The above two cases of the Supreme Court, in the cases of Navnit Lal C. Javeri and Ellerman Lines Ltd., were also noticed by the Hon'ble Calcutta High Court in the case of CIT v. Wilh. Wilhelmsen [1978] 115 ITR 10. 11. The learned departmental representative, however, referred to the decision of the Supreme Court in Gestetner Duplicators (P.) Ltd. v. CIT [1979] 117 ITR 1. In this case, a circular of the Board was relied on by the counsel for the revenue to show that commission did not partake the character of salary. The Court observed that the Board's view or instructions could not detract from the legal position arising on proper construction of the expression 'salary' which, according ..... X X X X Extracts X X X X X X X X Extracts X X X X
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