2005 (1) TMI 45

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....the LIC of India, Central Office, Mumbai, and for further directions to the Corporation and its branches not to deduct income-tax at source in respect of payment to the petitioners known as conveyance allowance and additional conveyance allowance, particularly for the year 2004-2005 and for other consequential relief. These petitions are filed contending that the payment which the petitioners receive from the employer and which is known by the name conveyance allowance and additional conveyance allowance, is exempted from income-tax under the provisions of clause (14) of section 10 of the Act and to the knowledge and awareness of the employer. The circular issued by the Corporation to all its branch managers to act in any way to deduct a....

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....e High Court, is making efforts through the circular to ensure that persons like the petitioners, who can claim benefit under section 10(14) of the Act, comply with the requirements of the very exemption provision so that ultimately when their tax liability is determined they are not deprived of the benefit of section 10(14) of the Act because of factual non-compliance of the requirement of the section. In fact the benefit under the section, which reads as under: "Section 10. Incomes not included in total income.- 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 the nature of a perqu....

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....ot having claimed the same. The object of the circular, on the face of it, appears to be for avoiding repetition of such situations; that if the employee really qualified for the exemption and to the limit prescribed in terms of rule 2BB of the Income-tax Rules (for short, "the Rules"), a certificate is issued in favour of such employee to that extent so that the benefit of exemption is claimed by the employee that the employee does not lose the benefit by not putting forth the claim in the proper form and by placing necessary materials in this regard. The exemption granted under section 10(14) of the Act is not an absolute exemption, but a conditional one subject to the qualifications mentioned in the section itself. In the first instan....

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....ion (of tax) at source in itself is not determination of the tax liability. In fact the language of the circular dated April 24, 2004, indicates that the deduction is required to be made even in respect of conveyance allowance and additional conveyance allowance payable to its Development Officers in accordance with the tax laws and the provisions in the light of the circular issued by the Central Board of Direct Taxes. By issuing the circular, the Corporation is attempting to ensure that in respect of the amount qualifying for exemption a certificate to that effect is only issued to the officer eligible for it and to deduct income-tax accordingly. In fact the very circular indicates that the amount of expenditure that the officer has incur....