TaxTMI 
TaxTMI 
1983 (9) TMI 104
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....er was that the salary received by the assessee as a Judge of the High Court was not taxable under the Act. This plea was not accepted. His second contention before the Commissioner (Appeals) was that the ITO was not legally correct in allowing only Rs. 1,000 under section 16(i). The claim of the assessee was that he was entitled to the full allowance as might be permissible under section 16(i)(b). 4. The Commissioner (Appeals) analysed the facts of the case. He found that the assessee was in receipt of the conveyance allowance of Rs. 300 per month under section 22B of the High Court Judges (Conditions of Service) Act, 1954, and, therefore, the deduction under section 16(i) had been limited to Rs. 1,000 by the ITO. He was of the view that since the ITO had not brought this conveyance allowance to tax in the assessment of the assessee, the presumption was that it had been granted to the assessee to meet the expenses wholly, necessarily and exclusively incurred in the performance of the duties of his office falling under section 10(14) of the Act. Further, following the letter F. No. 200/135/79-IT (A-1), dated 4-7-1981 [(1981) 7 Taxman, Sec. IV, page 35], addressed by the CBDT to ....
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....ance contemplated in clause (i) was the one that was granted to an assessee otherwise than wholly and exclusively in the performance of his duties. His further contention was that since the conveyance allowance granted to a Judge related wholly and exclusively in the performance of his duties, it was not open to the ITO to limit the standard deduction to Rs. 1,000 only. 6. However, both the parties were helpful to us in bringing to our notice an instruction of the CBDT which has facilitated our job. We will like to quote it in full as under : "Instruction No. 1088 : XXIII/1/48 -- Deduction of tax at source from salaries of High Court Judges -- Exemption under section 10(14) of the Income-tax Act, 1961 in respect of conveyance allowance paid to High Court Judges : Reference is invited to Circular No. 196 [F.No. 275/47/76-IT(J), dated 31-3-1976]. The department has received a reference from the High Court Judges regarding the applicability of the above circular in respect of the conveyance allowance paid to the High Court Judges under section 22B of the High Court Judges (Conditions of Service) Amendment Act. Under this provision every Judge is entitled to a conveyance al....
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....e employee is in receipt of an allowance which partakes the character of a conveyance allowance, the standard deduction should be restricted to Rs. 1,000, whatever be the nomenclature given to the allowance. Conveyance allowance is to be distinguished from the reimbursement of the actual expenses as and when incurred in the performance of duties. Standard deduction would not be restricted to Rs. 1,000 in case of reimbursement of expenses. However, where a claim is made that a certain payment is reimbursement of expenses incurred in the performance of duties, the claim would have to be proved before the assessing authorities. It may be pointed out that full standard deduction is available from the assessment year 1982-83 even where conveyance allowance is available. Letter No. F.No. 208/135/79-IT(A-1), dated 4-7-1981 addressed to FICCI by CBDT." The above letter clearly states that standard deduction should not be restricted to Rs. 1,000 in case of reimbursement of expenses. Since conveyance allowance is held to be reimbursement of expenses, the assessee will be entitled to the full standard deduction of Rs. 2,213 as rightly held by the Commissioner (Appeals). 9. Normally t....
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....onsidered in the case of Navnit Lal C. Javeri clearly deviated from the provisions of the Act, yet it was held that the circular was binding on the ITO. The above two cases of the Supreme Court, in the cases of Navnit Lal C. Javeri and Ellerman Lines Ltd., were also noticed by the Hon'ble Calcutta High Court in the case of CIT v. Wilh. Wilhelmsen [1978] 115 ITR 10. 11. The learned departmental representative, however, referred to the decision of the Supreme Court in Gestetner Duplicators (P.) Ltd. v. CIT [1979] 117 ITR 1. In this case, a circular of the Board was relied on by the counsel for the revenue to show that commission did not partake the character of salary. The Court observed that the Board's view or instructions could not detract from the legal position arising on proper construction of the expression 'salary' which, according to the Court, also included commission paid by the assessee to its salesman. It will be pertinent to mention here that the circular under consideration of the Supreme Court was against the view canvassed by the assessee. Obviously, therefore, the revenue could not take advantage of it and the Court could also not say that it was binding on the i....