- (1.) IN this bunch of 60 writ petitions, the vires of Section 10 (14) (ii) of the Income-tax Act, 1961 (as amended up to the insertion of the Direct Tax Laws (Second Amendment) Act, 1989), hereinafter to be referred to as the "act", has been challenged on the grounds that there is excessive delegation of legislative power by Parliament to the Central Government and that the delegated power is unguided and uncanalised. In substance, the inaction of the Central Government in not exempting city compensatory allowance and dearness allowance by not including these two items in the exemption notification is the basis of challenge.
(2.) SECTION 2 (24) of the Act defines income and, according to Sub-clauses (iiia) and (iiib) of this section, any special allowance or benefit, other than perquisite included under Sub-clause (iii), specifically granted to the asses-see to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit and any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living are included in the income.
(3.) COUNSEL for the parties are agreed that city compensatory allowance and dearness allowance would fall under Sub-clause (iiib) of Section 2 (24) of the Act. Accordingly, these two allowances would form part of the income as denned in Section 2 (24) of the Act.;