N. Sar Vs. Income-tax Officer - Court Judgment

Excerpt:
1. this appeal has been filed by the assessee against the order of the id. dc (a) dated 6-12-1990. the assessee is a director of bccl and received coal field allowance during the year under appeal. he claimed that 50 per cent of this allowance should be considered as non-taxable in view of several decisions of the itat. the assessing officer while framing the order under section 143(1) had allowed rs. 1,200 only as non-taxable. the assessee had filed a petition under section 154 requesting the assessing officer to rectify the order, but the said request was rejected by the assessing officer stating that the itats decision relied by the assessee are no more in force in view of board's circular no. 517, dated 16-6-1988. in that circular board has directed that only the excess over 100 per.....

Judgment:
1. This appeal has been filed by the assessee against the order of the Id. DC (A) dated 6-12-1990. The assessee is a Director of BCCL and received coal field allowance during the year under appeal. He claimed that 50 per cent of this allowance should be considered as non-taxable in view of several decisions of the ITAT. The Assessing Officer while framing the order under Section 143(1) had allowed Rs. 1,200 only as non-taxable. The assessee had filed a petition under Section 154 requesting the Assessing Officer to rectify the order, but the said request was rejected by the Assessing Officer stating that the ITATs decision relied by the assessee are no more in force in view of Board's Circular No. 517, dated 16-6-1988. In that Circular Board has directed that only the excess over 100 per month or 50 per cent of the actual colliery allowance paid by the Coal India Limited whichever is more is to be treated as perquisite and the balance amount of the payment of the said allowance may be allowed to be deducted while computing the income under the head 'salaries'. Before the Id. D.C.(A), the assessee's counsel contended that CBDT have no power as per provisions of Section 295 to issue directions which interferred with the jurisdiction of the appellate authorities. He submitted that Board Circular relied upon by the Assessing Officer cannot overrule the decisions of the ITAT. The Id. D.C.(A) disagreed with him as he was of the opinion that CBDT was competent to issue the said circular. He dismissed the appeal. The Id. counsel for the assessee argued that Section 295 of the Income-tax Act, 1961 exhaustively enumerates where and when the Central Government may frame the rule for carrying out the purpose of this Act. This rule had not empowered the Central Government to overrule any judicial decision. He therefore, argued that the orders of the Tribunal in this respect should be followed and the appeal be allowed.

2. The Id. DR on the contrary submits that it is within the power of the Central Government to frame the Rule for the carry out the purposes of this Act including the impugned one. He argued that the Assessing Officer was justified in refusing to grant rejection on the basis of ITATs order following the Board's Circular.

3. I have considered the rival submissions, facts and the material placed on record. I do not agree with the Id. counsel for the assessee that the Central Government cannot make any Rule which may go against some decision of the judicial decision. In any case deliberation in respect of Section 295 is irrelevant in this case. The Colliery allowance is a special allowance which has to be considered under Section 10(14) of the Act. Section before assessment year 1989-90 ran as under: (14) any special allowance or benefit not being in the nature of an entertainment allowance or other perquisites 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, to the extent which such expenses are actually incurred for that purpose.

From the assessment year 1989-90 (the year under appeal) the said Section has been amended as follows: (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, specially granted to meet in the performance of the duties of an officer or employment of profit as the Central Government may by notification in the Official Gazette, specify to the extent to which such expenses are actually incurred/or that purpose. [Emphasis supplied] It is, therefore, the Central Government by notification can determine the quantum that should be considered as non-taxable. The Central Government vide its notification No. SO 267(E), dated 29-3-1990 notified as under: In exercise of the powers conferred by Sub-clause (i) of Clause (14) of Section 10 of the Income-tax Act, 1961 (43of 1961), the Central Government hereby specifies the following special allowances specifically granted to meet expenses wholly necessarily and exclusively incurred in the performance of the duties of an office or employment of profits, for the purposes of the said Sub-section namely:- '(a) any allowance (by whatever name called) granted to meet the expenditure incurred on a helper where such helper is engaged for the performance of the duties by an office or employment of profit.(b) ** ** ** ** ** This notification does not quantify the amount of deduction or determination. The Circular relied on by the AO to restrict it to Rs. 100 only, therefore, is contrary to the notification. Now to determine whether the impugned allowance can be considered as an allowance to meet the expenditure incurred for performance of office duty, the Circular No. 200/110/80-I(A-I). Instruction No. 1514, dated 24th June, 1983 may be referred. The CBDT in that Circular had acknowledged that the impugned payments were meant to defray the expenses, inter alia, for looking after the property to the company. Previously the coal field allowance was termed as "orderly allowances". According to Chambers Twentieth Century Dictionary "Orderly" means a non-commissioned officer who carries official message for his superior officers. The word 'orderly' is, therefore, wide enough to include helper as envisaged in the above notification. In the 11th Meeting of the Boara of Directors on 4-11-1973 approved the change in nomenclature of the words "orderly allowance" to "coal field allowance". The Patna Bench of I.T.A.T. in I.T.A. No. 612 (Pat.) 1983 in its order dated 13-6-1984 had also accepted that there is not much difference in the allowance as termed orderly allowance or coal field allowance. In the said order the Tribunal had approved the deduction of 50 per cent from taxable income in respect of coal field allowance. I find no reason to differ. The assessee's claim, therefore, on that basis is accepted.