C I T JODHPUR vs. THE BRANCH MANAGER L I C BALOTRA

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ITA/5/2004HC RajasthanRJHC01024286200310 August 2007Author: DEO NARAYAN THANVI,P.B. MAJMUDAR2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal filed by the Revenue lacks substance and no substantial question of law arises for determination. The Court noted that the ITAT had relied on this Court's decision in LIC Vs. U.O.I. & Ors. (2003) 179 CTR 432. It was further pointed out that while a Special Leave to Appeal was preferred before the Hon'ble Supreme Court against the said decision, it was not entertained due to delay. Crucially, the Hon'ble Supreme Court, on merits, had observed that the conveyance allowance paid to Development Officers is to be treated as exempted from tax, and no tax deduction at source is required from monthly payments to them. Since the Tribunal's decision was based on this Court's judgment, which was subsequently affirmed in principle by the Supreme Court, the High Court found no grounds to interfere. The appeal was accordingly dismissed.

What were the facts?

The appeal by the Commissioner of Income Tax-II, Jodhpur (Revenue) challenges an order dated 21.2.2003 passed by the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench. The ITAT had decided two appeals, ITA No.126(JDPR)/1998 for assessment year 1996-97 and ITA No.125/JDPR/1998 for assessment year 1997-98, concerning the Life Insurance Corporation of India (Assessee), Branch Manager, Balotra. The ITAT held that Development Officers of LIC are entitled to exemption under Section 10(14) for conveyance and additional conveyance allowances if actually spent for their intended purpose. This decision was based on this Court's ruling in LIC Vs. U.O.I. & Ors. (2003) 179 CTR 432. The Revenue's appeals were dismissed by the ITAT on this basis.

What were the issues?

1. Whether the Development Officers of LIC are entitled to exemption under Section 10(14) of the Income Tax Act, 1961, in respect of conveyance allowance and additional conveyance allowance, provided such allowances have been actually spent for the purpose for which they were given? Assessee's Contention: The Assessee (LIC) contended that its Development Officers are eligible for exemption under Section 10(14) for conveyance and additional conveyance allowances, as held by this Court in LIC Vs. U.O.I. & Ors. (2003) 179 CTR 432. The Assessee also noted that the Special Leave to Appeal preferred by the Revenue against this decision before the Hon'ble Supreme Court was not entertained due to delay, and on merits, the Supreme Court observed that such allowances are to be treated as exempted from tax, and no tax needs to be deducted at source. Revenue's Contention: The Revenue's contention is implicitly that the ITAT erred in allowing the exemption, as evidenced by their appeal against the ITAT's order. The judgment does not explicitly record the Revenue's arguments before the High Court, but their appeal signifies disagreement with the ITAT's finding.

Which sections of the Income-tax Act were involved?

Section 10(14)

AI-generated summary — verify with the full judgment below

-1- D.B. INCOME TAX APPEAL NO.5/2004 Commissioner of Income Tax-II, Aaykar Bhawan, Jodhpur Vs. The Branch Manager, Life Insurance Corporation of India, Balotra DATE OF ORDER : 10.08.2007 HON'BLE MR. JUSTICE P.B. MAJMUDAR HON'BLE MR. JUSTICE DEO NARAYAN THANVI Mr. K.K.Bissa for the appellant. Mr. Anjay Kothari for the respondent. BY THE COURT : (PER MAJMUDAR,J.) This appeal is directed against the order dated 21.2.2003 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur in ITA No.126(JDPR)/1998 for assessment year 1996-

97.

The Tribunal decided two appeals by a common order passed in ITA No.126(JDPR)/1998 for assessment year 1996-97 as well as ITA No.125/JDPR/1998 for assessment year 1997-98. The Tribunal while deciding the said appeals has followed the decision given by this Court in the case of LIC Vs. U.O.I. & Ors., -2- preferred before the Hon'ble Supreme Court but the same has not been entertained on the ground of delay. Even, on merits of the case also, the Hon'ble Supreme Court has observed that the amount of conveyance allowance paid to the Development Officers is to be treated as exempted from tax and no tax need be deducted at source from the monthly payment made to the Development officers. Since the Division Bench's judgment of this Court has been confirmed by the Hon'ble Supreme Court and since the Tribunal has relied 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. Accordingly, the appeal stands dismissed. (DEO NARAYAN THANVI), J. (P.B.MAJMUDAR), J. ms rathore

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