Law:

Section:

Section 10(14) of the Income-tax Act, 1961 - Special allowance - Assessment year 1990-91 - Whether Development Officer in LIC was entitled to claim exemption under section 10(14) in respect of conveyance allowance and additional conveyance allowance upon satisfying the conditions that such allowances had been spent for the purposes for which they were given wholly, necessarily and exclusively in performance of duties - Held, yes Circulars and clarifications - CBDT's Circular dated 28-11-1986and LIC Circular dated 3-3-1987 FACTS The appellant, a Development Officer in Life Insurance Corporation, in 1991 filed a writ petition seeking direction to declare that conveyance allowance and additional conveyance allowance were not taxable under section 10(14). He also sought to quash the assessment pertaining to the assessment year 1990-91. The petitioner placed reliance on CBDT Circular dated 28-11-1986 that CBDT has taken a view that the additional conveyance allowance is exempt from income-tax under section 10(14), provided a certificate was appended with the return of income filed by the Development Officer to the effect that the additional conveyance allowance received by him during the previous year was actually incurred by him as expenditure for performance of his duties. On appeal : HELD For enabling an assessee to take the benefit of section 10(14 ) it is imperative on his part to satisfy that special allowance, benefit or perquisite in respect of which claim is made, has been granted to him to meet expenses wholly, necessarily and exclusively incurred in the performance of duties of office or employment of profit. As a result of amendment of section 10(14 )(i) by the Finance Act, 1995, such special allowance or benefit has to be prescribed by the Board by framing the rule in that regard. Rule 2BB has made such prescriptions.[Para 18] It was evident that the conveyance allowance and the additional conveyance allowance were paid to the Development Officers for meeting actual expenditure incurred by them in discharge of their field duties and, thus, wholly, necessarily and exclusively for meeting such expenditure, the allowance was being exempt as per the norms…

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