Law:

Section:

Section 10(14) of the Income-tax Act, 1961 - Special allowance - Petitioner-employees were working as development officers with respondent-LIC - As development officers had not availed benefit under section 10(14) by properly complying with requirements of said section, respondent had been subjected to levy of interest and penalty for not deducting tax at source - To avoid such situation, respondent issued a circular to effect that in respect of amount qualifying for exemption, a certificate would be issued to eligible employees so that benefit of exemption could be claimed by them; and that claim under section 10(14) would not be lost for not putting forward their claim in proper form and by not placing proper materials in that regard - By said circular respondent also directed branch managers to deduct tax at source from conveyance allowance and additional conveyance allowance payable to development officers in accordance with tax laws and circular issued by CBDT in that behalf and that to extent development officers furnished copies of vouchers/bills for actual expenditure incurred by them, amount mentioned therein could be taken note of for purpose of section 10(14) - Whether since object of said circular was that if petitioners really qualified for exemption, it was to be ensured that a certificate to that effect was issued in their favour based on which not only petitioners could claim benefit but also employer was relieved of his obligation to deduct tax at source, said circular could never be said to be to detriment of petitioners - Held, yes FACTS The petitioner-employees were working as development officers of the respondent-'LIC'. In the instant writ petitions, the petitioners, sought to quash a circular dated 24-4-2004 issued by the respondent and for further directions to the respondent and its branches not to deduct tax at source in respect of payment to petitioners for conveyance allowance and additional conveyance allowance. It was the case of the petitioners that the payments received by them for conveyance allowance and additional conveyance allowance were exempt from income-tax under section 10(14) and the circular issued by the respondent to…

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