As Per Income Tax Act 1961 “Exemption of Special allowances” includes:
- Any such special allowance or benefit, not being in the nature of a perquisite.
- Any such allowance granted to the Assessee either to meet his personal expenses.
Related Cases:
1. S. 10(5), 10(14) & 192 of the IT Act, 1961—TDS—Whether the assessee was under statutory obligation under IT Act, 1961 and/or the rules to collect evidence to show that its employee had actually utilized the amount paid towards leave travel concession/conveyance allowance? Held that there is no circular of CBDT regarding the employer u/s 192 to collect and examine the supporting evidence to the declaration to be submitted by the employee—CIT vs. ITI Ltd. (SC)
2. S. 10(14) of IT Act, 1961—Exemption—The additional conveyance allowances granted by the LIC to its Development Officers are exempted from tax under s. 10(14) of the IT Act. However, the Department is at liberty to establish and disallow exemption in cases where the employee does not prove that additional conveyance allowance is requirement of actual expenditure and it is not a perquisite which is outside the scope of s. 10(14) of the Act—CIT vs. N. Shajilal. [2010] 320 ITR 489 (Ker)
3. S. 10(5), 10(14) & 192 of the IT Act, 1961—TDS—Whether the assessee was under statutory obligation under IT Act, 1961 and/or the rules to collect evidence to show that its employee had actually utilized the amount paid towards leave travel concession/conveyance allowance? Held that there is no circular of CBDT regarding the employer u/s 192 to collect and examine the supporting evidence to the declaration to be submitted by the employee.
4. S. 10(14) of IT Act, 1961—Special allowance—The rule 2BB clearly lays down the prescribed allowances. It is undisputed that incentive bonus does not come under any of the allowances prescribed by said rule. Vide letter date 12.3.1997 the CBDT made it clear that if the LIC reimburses expenses incurred by the Development Officer in the form of the incentive bonus actually spent for duties of offices, such reimbursement will not form part of the salary of the Development Officer and will be exempt from the tax and only taxable incentive bonus will appear in their salary certificates. Hence, It authorities were not justified in bringing such amount to tax while computing Assessee RAVIPRAJs taxable income—Satish Gupta vs. ITO (2012) 134 ITD 686 (ITAT-Delhi)
5. Income-tax Act, 1961, sections 10(14)—Exemption—Exemption on amount of conveyance allowance paid to the Development officers of Life Insurance Corporation of India—The Rajasthan High Court while dismissing the appeal held that:—”Since the Division Bench’s judgment of this Court has been confirmed by the Hon’ble Supreme Court and since the Tribunal has ralied upon the said decision of this Court, we do not find any substance in this appeal. In our view, no substantial question of law arises for determination in this appeal.” LIC Vs. U.O.I. & Ors., reported in (2003) 170 CTR 432, followed. CIT-iind, Aaykar Bhawan, Jodhpur Vs. The Branch Manager, LIC of India, Balotra (Raj)
6. S. 10(14) of the IT Act, 1961, r/w r. 2BB of IT Rules 1962—Special allowance—The two allowance i.e., conveyance allowance and additional conveyance allowance paid by the LIC to the Development Officers are not exempted from payment of income tax under s. 10(14) of the Act—National Federation of Insurance Field workers of India Cuttack Divisional Association vs. U.O.I. (2009)
Reference:
As Per Section 10(14) & Rule 2BB, of the Income Tax Act, 1961-
10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—
(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 such expenses are actually incurred for that purpose ;
(ii) any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profitare ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, [as may be prescribed and to the extent as may be prescribed]
[Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to the place of his posting or residence ;]
Prescribed allowances for the purposes of clause (14) of section 10 under section 2BB:
(1) For the purposes of sub-clause (i) of clause (14) of section 10, prescribed allowances, by whatever name called, shall be the following, namely :—
(a) any allowance granted to meet the cost of travel on tour or on transfer;
(b) any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty;
(c) any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit :
Provided that free conveyance is not provided by the employer;
(d) any allowance granted to meet the expenditure incurred on a helper where such helper is engaged for the performance of the duties 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 : For the purpose of clause (a), “allowance granted to meet the cost of travel on transfer” includes any sum paid in connection with transfer, packing and transportation of personal effects on such transfer.
Provided that any Assessee claiming exemption in respect of the allowances mentioned at serial numbers 7 and 8 shall not be entitled to the exemption in respect of the allowance referred to at serial number 2:
Provided further that any assessee claiming exemption in respect of the allowance mentioned at serial number 9 shall not be entitled to the exemption in respect of disturbed area allowance referred to at serial number 2.