Law:

Section:

Section 10(14), read with section 192, of the Income-tax Act, 1961 and rule 2BB of the Income-tax Rules, 1962 - Special allowance - Petitioner - Association filed writ petition praying for a declaration that conveyance allowance and additional conveyance allowance paid to Development Officers of LIC were exempt under section 10(14) and that there should be no deduction of tax at source on amounts of such allowances by LIC - Whether what is amount of said allowances that can be claimed to be exempted under section 10(14) would depend upon assessee's establishing actual amount spent by him wholly, necessarily and exclusively in the performance of his duties at the time of completion of assessment - Held, yes - Whether, therefore, in terms of section 192, there was a clear obligation on employer (LIC) to deduct tax due on those amounts at source leaving it to individual assessee to claim exclusion or refund on establishing conditions required under section 10(14), read with rule 2BB - Held, yes FACTS In the writ petition, the petitioner association had prayed for a declaration that conveyance allowance and additional conveyance allowance paid to the Development Officers of the LIC were exempt under section 10(14), read with rule 2BB and for a further declaration that there should be no deduction of tax at source on the amounts of such allowances. According to the petitioner, the said allowances were not taxable as salary income, since in terms of section 10(14), the said allowances were not liable to be included in computing the total income of a previous year of any person and, consequently, the tax on those amounts could not be deducted by the employer. On the other hand, the stand of the department was that allowances in question were taxable and in any case, even if a portion of such allowances was liable to be exempted or excluded while completing the assessment of a particular assessee-Development Officer, it was a matter to be decided at the time of completing the assessment and there was no question of the LIC not being obliged to deduct at source, the tax due on those payments. HELD Section 192 imposes an obligation on any person responsible for paying…

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