- (1.) Let affidavit of service filed in Court today be kept on record. Despite service of notice none appears on behalf of the respondent-assessee. 1.1 Heard the learned counsel for the appellant. 1.2 The appeal was admitted on two questions. The question No. 1 is as follows:-- "1. Whether on the facts and in the circumstances of the case Tribunal was justified in law in upholding the order of Commissioner of Income-tax (Appeals) allowing the Additional Conveyance allowance as an eligible exemption under section 10(14) of the Income-tax Act, 1961 in view of Circular No. 701 dated 20.03.1995 and guideline framed by the CBDT F No. 275/11/2001-IT(B), dated 1.02.2001?" Since there are typographical mistakes, the question No. 2 is reformulated in the manner as under: "Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing additional conveyance allowance in terms of notification No. GSR 606 (E), dated 9th June, 1989 where it is clearly specified that any allowance granted to meet the expenditure incurred on conveyance in the performance of duties of an office or employment of profit shall only qualify for consideration and so far as the relevant certificate issued by the employer against the impugned amount of Additional Conveyance allowance is concerned, no absolute inference can be drawn that the same was incurred by the assessee on conveyance only for the promotion of new business?"
(2.) In the instant case, the assessee, working as a Development Officer in the Life Insurance Corporation of India (for short the "LIC") had received a sum of Rs. 3,74,013/- from his employer as additional conveyance allowance. In view of two certificates issued by the concerned branch of LIC, exemption was sought for under section 10(14)(i) of the Income-tax Act, 1961. The Assessing Officer after considering the facts and the notifications held that the assessee was not eligible for any deduction claimed under the said section particularly when the notification as contemplated under section 10(14)(i) of the Act was yet to be issued by the Central Government.
(3.) Aggrieved, the assessee preferred appeal. The CIT(A) allowed the appeal by holding as under: "Before me, it was submitted on behalf of the appellant that there was no validity for the Assessing Officer's action in not giving exemption for the conveyance allowance and additional conveyance allowance as per the certificate u/s 203 in Form No. 16 and also an exclusive certificate given by the employers with regard to the balance additional conveyance allowance of Rs. 3,74,013/-. The ITAT's judgements in similar cases as also my own decision in a number of such cases relied upon in support of the case. I have considered the submissions made and looked into the material on record. The Assessing Officer has based the disallowance on the fact that a major part of the additional conveyance allowance was not subjected to tax deduction at source. This may be because the final details of the expenses incurred could not be submitted before the last of making the TDS from the total of the financial year concerned. In any case, it does not vitiate the appellant's claim for full exemption u/s 10(14) of the I.T. Act in view of the two certificates from the Manager, LICI of the concerned branch. The Assessing Officer is directed to treat both the receipts Rs. 24,564/- and Rs. 4,08,413/- as exempt u/s.10(14) of the I.T. Act. The total income would be reduced to Rs. 11,90,723/- (Rs. 16,23,700/- minus Rs. 24,564/-) say, Rs. 11,90,720/-. It has to be noted that the total income is lesser than the total income returned at Rs. 12,49,490/- by the sum of Rs. 58764/- because the appellant had, inadvertently (in the computation of income) not claimed the deductions of Rs. 24,564/- (conveyance allowance) and Rs. 34,200/- (part of additional conveyance) exempted u/s 10(14) of the I.T. Act in the certificate in Form No. 16, and the Assessing Officer also did not correct this arithmetical error either in the order passed order u/s 143(1) or u/s 14(3)(i) of the I.T. Act. In the result, the appeal is allowed.";