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

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ITA/81/2005HC RajasthanRJHC01029694200314 August 2007Bench: DEO NARAYAN THANVI,P.B. MAJMUDAR2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that 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, subject to the condition that such allowances have actually been spent for the purpose for which they were given. This decision was based on the High Court's judgment in LIC Vs. U.O.I. & Ors. (supra). The High Court's decision was further supported by the Supreme Court, which, while dismissing a Special Leave Petition on grounds of delay, also observed on merits that the conveyance allowance paid to Development Officers is to be treated as exempted from tax and no tax needs to be deducted at source. The High Court found no substantial question of law arising in the appeal before it, given the Supreme Court's stance and the Tribunal's reliance on the High Court's prior decision. The appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax-II, Jodhpur, appealed against an order dated 21.2.2003 passed by the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench. The ITAT had decided two appeals, ITA No.125(JDPR)/1998 for assessment year 1997-98 and ITA No.126(JDPR)/1998 for assessment year 1996-97. The ITAT followed a decision of the High Court in LIC Vs. U.O.I. & Ors. (2003) 179 CTR 432, holding that Development Officers of LIC are entitled to exemption under Section 10(14) for conveyance allowance and additional conveyance allowance, provided the amounts were actually spent for their intended purpose. Consequently, the ITAT dismissed the appeals filed by the Revenue. The Revenue's Special Leave Petition against the High Court's decision was dismissed by the Supreme Court on grounds of delay, and also on merits, the Supreme Court observed that conveyance allowance paid to Development Officers should be treated as tax-exempt.

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 for assessment year 1997-98 and 1996-97. Assessee's Contention: The assessee (LIC) contended that the Development Officers are entitled to exemption under Section 10(14) for conveyance allowance and additional conveyance allowance, provided the conditions of actual expenditure for the purpose for which they were given are met. The assessee relied on the decision of the High Court in LIC Vs. U.O.I. & Ors. (supra), which was confirmed by the Supreme Court. Revenue's Contention: The Revenue argued that the exemption under Section 10(14) should not be granted. The judgment does not explicitly record the Revenue's specific arguments beyond their appeal against the ITAT's order.

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.81/2005 Commissioner of Income Tax-II, Aaykar Bhawan, Jodhpur Vs. The Branch Manager, Life Insurance Corporation of India,Barmer DATE OF ORDER : 14.08.2007 HON'BLE MR. JUSTICE P.B. MAJMUDAR HON'BLE MR. JUSTICE DEO NARAYAN THANVI Mr. K.K.Bissa for the appellant. Mr. J.L.Purohit 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.125(JDPR)/1998 for assessment year 1997- 98. The Tribunal decided two appeals by a common order passed in ITA No.125/JDPR/1998 for assessment year 1997-98 as well as ITA No.126(JDPR)/1998 for assessment year 1996-97. 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., reported in (2003) 179 CTR 432 and held that the Development Officers of LIC are entitled to exemption under Section 10(14) in respect of conveyance allowance and additional conveyance allowance upon satisfying the condition that such allowance have actually been spent for the purpose for which they were given. On that basis, the Tribunal dismissed both the appeals preferred by the Revenue. It has been pointed out to this Court that the decision on which reliance has been placed by the Tribunal in the

-2- case of LIC Vs. U.O.I. (supra), Special Leave to Appeal was 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. This Court has already dismissed identical appeal being 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), arising out from the same order. 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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