SHRI. M K VISHNU PRASAD,CHENNAI vs. ITO COMPANY WRD II (1), CHENNAI

आदेश / O R D E R

per the ld. Authorised Representative, ld. Assessing Officer disallowed exemption claimed by the assessee on postal allowance of �30,000/- and Transport allowance of �2,40,000/-. Contention of the ld. Authorised Representative was that assessee’s appeal before ld. Commissioner of Income Tax (Appeals) was also not successful. As

per the ld. Authorised Representative, though the assessee pointed out that during the period for which he received salary relevant previous year, he was a member of Legislative Assembly, this was not accepted by the Ld.CIT(Commissioner of Income Tax (Appeals)). According to ld. Authorised Representative, assessee had received allowance in his capacity as an MLA. Submission of the ld. Authorised Representative was that assessee was entitled for exemption u/s.10(14) of the Act.

Relying on Rule 2BB of the Income Tax Rules, 1962, ld. Counsel submitted that allowances prescribed for the purpose of Section 10(14) included transport allowance. Ld. Authorised Representative fairly admitted that the said Rule did not cover postal allowance. According to him, though postal allowance might not be eligible for exemption u/s.10(14) of the Act, transport allowance of �2,40,000/- was entitled to such exemption.

I have considered the rival contentions and perused the 4. orders of the authorities below. First issue before me, whether assessee was an Ex-MLA or MLA during the relevant previous year. If the assessee was an Ex-MLA, he would not have received salary from the Legislative Assembly. He would have been at the best eligible for pension under the rules applicable for the Members of the Assembly.

Ld. Assessing Officer has in the assessment order itself mentioned receipt of salary of �6,00,000/- by the assessee from State Legislative Assembly. Hence, in my opinion, assessee was entitled to claim the benefits available to him u/s.10(14) of the Act. Section 10(14) of the Act, which is apposite here is reproduced hereunder:-

(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 profit are 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.

Allowances prescribed for the purposes of Clause (14) of Section 10 is given in Rule 2BB which is reproduced hereunder:-

‘’(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’’.

Allowances mentioned in Rule 2BB definitely covered transport allowance of �2,40,000/- received by the assessee. However, postal allowance is not covered by the said rule. Hence, in my opinion, assessee was eligible for claiming exemption on the transport allowance of �2,40,000/- received by him but not on the postal allowance of �30,000/-. I therefore direct the ld. Assessing Officer to allow assessee a further exemption of �2,40,000/- on the transport allowance, while sustaining the disallowance of the postal allowance of �30,000/- Orders of the lower authorities to this extent is set aside.

Order pronounced on the 1st day of August, 2018, at Chennai.