SH. BHALLE RAM NAIN,CHANDIGARH vs. ACIT, BHIWANI

Briefly stated, the facts of the case are that the assessee is a Development Officer of LIC of India, who filed return claiming exemption u/s 10(14) on expenditure amounting to Rs.1,12,466/-. The return was processed. Thereafter, the AO passed order u/s 154 on 8.8.2012 denying the benefit of such exemption. The ld. CIT(A) upheld the rectification order.

I have heard the rival submissions and perused the relevant material available on record. The question as to whether or not exemption u/s 10(14) should be allowed to the Development Officers of the LIC has been decided by various High Courts in one way or the other. The Hon’ble jurisdictional High Court in CIT vs. Branch Manager, LIC of India, 298 ITR 358 (P&H) has approved the view of the Tribunal holding that the assessee, a branch of LIC, could not be held as an assessee in default for not deducting tax at source in view of the fact that the Revenue did not challenge simultaneous orders passed by the Tribunal pertaining to the other offices of the LIC. The Hon’ble Rajasthan High Court in CIT vs. Madan Gopal Bansal (2014) 366 ITR 319 (Raj) has allowed exemption u/s 10(14) in respect of conveyance allowance and additional conveyance allowance for meeting actual expenditure incurred in discharge of the field duties. This shows that the issue as to whether exemption u/s 10(14) should be allowed, is at any rate, a debatable one. Section 154 talks of rectifying a mistake which is apparent from record. It does not encompass debatable issues within its fold. If two views are possible on a point, the issue becomes debatable and moves out of the purview of rectification proceedings. In my considered opinion, the ld. CIT(A) was not justified in upholding the denial of exemption u/s 10(14) in proceedings u/s 154 of the Act. I, therefore, overturn the same.

In the result, the appeal is allowed.