TMI Blog2006 (4) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... lowances so paid to the assessee. The disallowance sustained by the CIT(A) therefore does not meet our approval, so far as objections taken by him are concerned. As far educational allowance is concerned, rule 2BB(1)(e) provides that any allowance granted for encouraging the academic, research and training pursuits in educational and research institutions is eligible for exemption u/s 10(14)(i). But then, the assessee is working in a ship and it cannot be said that the allowance was granted to him for encouraging the academic, research and training pursuits in educational and research institutions . In our humble understanding, an academic or research allowance could be eligible for exemption u/s 10(14)(i) r/w rule 2BB only when academic, research and training pursuits are in educational and research institutions. There is no material to establish that this condition is fulfilled in the present case. Therefore, even as we hold that observations of the CIT(A) are not sustainable in law, we also hold that, on the facts of the present case, academic research allowance is not eligible for exemption u/s 10(14)(i) of the Act. In effect, the CIT(A)'s action of sustaining denial of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and academic research allowance aggregating to Rs. 65,114 in respect of which the assessee could not produce evidence of expenses actually spent and allowance so received. Aggrieved assessee carried the matter in appeal before the CIT(A) who confirmed the disallowance by observing that "appellant has not produced evidence regarding purchases of uniform and washing expenses" and that the "appellant individual is earning salary income" it is thus seen that purchases and washing of uniform, expenses on purchase of journals and periodicals and attending seminars are personal expenses of the appellant". The assessee is not satisfied and is in appeal before us. 5. We have heard the rival contentions, perused the orders of the authorities below, duly considered the factual matrix of the case and legal position. 6. We find that the basic reason of declining the exemption claimed by the assessee is that the authorities below are not satisfied about evidence of the assessee having actually, spent the amount of allowance for the purposes for which the same were granted. A lot of emphasis is laid on the fact that section 10(14)(i) provides any allowance for the purpose of meeting expenses w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls and evidence of expenditure incurred by them for the actual usage of allowance. To allay these apprehensions, the Central Board of Direct Taxes, on 1-8-1955, issued a circular which is reproduced below for ready reference. "Special allowance or benefit being reasonable and not disproportionately high. No details of expenses actually incurred need be asked for the purpose of granting exemption under section 4(3)(vi) of 1922 Act. The exemption under section 4(3)(vi) in respect of any special allowance or benefit will be available from the assessment year 1955-56 only to the extent of the sanctioned amounts. Generally speaking, where the specific allowance are reasonable with reference to the nature of the duties performed by the assessee and are not disproportionately high compared to the salary received by him, no attempt will ordinarily be made to call for details of the expenses actually incurred by him with a view to disentitling him to some extent from the exemption. An enquiry will, of course, be justified and will be made in cases where the allowances are prima facie unreasonably high." Source: Direct Taxes Circulars Volume 1 - 1994 Edition - Page 1.130 It is, therefore, cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ships abroad cannot be, in our humble understanding, said to be excessive. Similarly, academic research allowance of Rs. 13,560 to an Electrical Officer, who is a qualified engineer and is required to keep abreast of the technical knowledge cannot either be said to be excessive or unreasonable. In the light of the aforesaid circular it is not open to the revenue to call for the details of expenses actually incurred unless the specific allowance are disproportionately high compared to the salary received by him or unreasonable with reference to the nature of the duties performed by the assessee. None of the conditions is satisfied in the present case. It is also not the case of the revenue that there is any material to indicate or establish that the assessee has any unspent portion out of the allowances so paid to the assessee. The disallowance sustained by the CIT(A) therefore does not meet our approval, so far as objections taken by him are concerned. 10. There is, however, one more aspect of the matter, the CIT(A) has held that these allowances are in the nature of personal expenses and therefore exemption under the provisions of section 10(14) in respect of the same cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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