AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 374
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....f Income Tax, in short 'DCIT') on 17.02.2000 for corresponding Financial Year 1998-99. The DCIT found that in respect of items inter-alia fixed conveyance allowance, additional conveyance allowance, under the reimbursement of expenses scheme, disbursed by the LIC, were subject to tax deduction. DCIT observed as follows:- "When the attention of the representative has drawn as to why the deductions of taxes as applidable were not made on the above items, it was stated the deductions of taxes were made on the basis of rules and instructions circulated by Central Office of Life Insurance Corporation of India. When it was pointed out as to why the deductions of taxes has not been made in compliance of provision of section 10 (14) (i) and 10(14) (i) of the I.T.Act. No plausible reply could be given from the side of the deductor co. Since the ddductor organisation has not deducted the taxes on the above four items and has allowed exemption in contravention of section 10(14) (i) as such the deductor corporation is liable for additional tax on the above. During the course of proceedings, the attention of the representatives was also invited towards instructions of CBDT clarificatory lett....
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....lop new business, to activise the existing agents, to locate person suitable for appointment as new agents, where such appointments are necessary, and to tap the potentiality of the area. You shall also utilise your tours for rendering all necessary assistance to the policy-holders of the corporation in the matter of policy servicing. iii) You shall be paid either travelling allowance in accordance with the rules of the Corporation in force from time to time governing payment of such allowance or a fixed Travelling allowance, as may be specified by the Competent Authority to meet the expenses of your tour. iv) Immediately on completion of a tour and in any case within 15 days thereafter, you shall submit your tour report in the specified form with the relevant statements to the Branch Office." 6. The petitioners have also placed on record a circular issued by the LIC to all its Zonal Managers and Officers with respect to the allowances payable to the Development Officers - indicating in a tabular manner the specific amounts payable in different areas. The learned counsel for the petitioners relied upon the certificate issued by the LIC, to the individual petitioners. The said ....
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.... that the petitioners' claim cannot exceed what was permissible to them in terms of the conditions of their employment, more particularly, what was spelt out in the circular dated 18.03.1991 or any other circular, which was applicable at the relevant time. 9. Section 10 of the Act which defines what is not income, inter-alia, proviso to Section 10(14) provides the allowances or benefits - which were not specified under Section 10(14)(ii) of the Act, which are granted to meet the expenses "wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment" are not to be treated as income. The provision states as follows: "10(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 emplo....
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....he following namely:- TABLE xxx xxx xxx Provided that any assessee claiming exemption in respect of the allowances mentioned at serial numbers 7 and 8 shall not be entitled to the exemption in respect of the allowance referred to at serial number 2: Provided further that any assessee claiming exemption in respect of the allowance mentioned at serial number 9 shall not be entitled to the exemption in respect of disturbed area allowance referred to at serial number 2." 11. In this case the DCIT specifically referred to Section 10(14)(i) of the Act and was of the opinion that the provision was not complied with. The order - as is evident from the relevant extract, nowhere discusses how the reimbursement of expenses towards conveyance allowance and additional conveyance allowance having regard to the incidence of travelling to be undertaken by the Development Officers, all of whom are before this Court, had to be treated as income. The submissions of the Revenue, in the course of the present proceedings, were premised upon application of Section 10(14)(ii) of the Act. That provision spells out the chart which lists exhaus....
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.... exclusively for meeting such expenditure, the allowance is being exempt as per the norms set out in the Life Insurance Corporation circular dated August 3, 1987, referred to in the preceding para. It appears that the Life Insurance Corporation has worked out the additional conveyance allowance to the Development Officers considering the probable expenditure for procuring the business. The Life Insurance Corporation appears to have devised the general formula having a reference to the parameters of the business and, thus, the payment of additional conveyance allowance is a reimbursement for actual expenditure incurred by the Development Officers on account of conveyance in relation to performance of their duties and the said expenditure has a direct nexus with the performance of duties for development of the insurance business by way of meeting several people and to enrol new life insurance agents and to meet the insurance persons for encouraging them to take insurance policies. Naturally, in such circumstances, touring expenses are incurred on conveyance. Such conveyance expenses are reimbursed by the employer as per the prescribed norms in the name of additional conveyance allowa....