section 10(5)/income-tax act

[2005] 142 taxman 64 (ker.)

High Court of Kerala

K.P. Harihara Kumar

v.

Union of India

G. Sivarajan, J.

OP No. 13431 of 1996(Y)

May 18, 2004

Section 10(5) of the Income-tax Act, 1961 read with rule 2B of the Income-tax Rules, 1962 - Leave travel concession  - Assessee being an officer of a Bank was entitled to expenses for air travel by availing leave travel facility without any limitation - Grievance of assessee was that dif­ference between  air travel fair and first class AC fair by rail was being assessed to income-tax - He filed instant writ petition challenging  provisions of rule 2B(a) making  difference between air travel charges and railway first class AC charges exigible to tax under Act on ground that this rule was ultra vires  provisions of section 10(5) - Whether assessee could succeed - Held, no

Facts

The assessee being an officer of a Bank was entitled to the expenses for air travel by availing the leave travel facility without any limitation. The grievance of the assessee was that the dif­ference between the air travel fair and first class AC fair by rail was being assessed to income-tax. He filed instant writ petition challenging the provisions of rule 2B(a) making the difference between the air travel charges and the railway first class AC charges exigible to tax under the Act on the ground that this rule was ultra vires the provisions of section 10(5).

Held

The question regarding exemption is a matter which is covered by the provisions of the Act. Unless there is an exemption in re­spect of the amount received from the bank for the leave travel facility availed, the petitioner cannot claim any exemption from tax in respect of the amount received. Clause (5) of section 10 provides that in computing the total income of a previous year in the case of an individual the value of any travel concession or assistance received by or due to him (a) from his employer for himself, his spouse and children, in connection with his proceed­ing on leave to his home-district in India and (b) from his employer or former employer for himself, his spouse and children, in connection with his proceeding to his home-district in India after retirement from service or after the termination of his service subject to such conditions as may be prescribed including the number of journeys and the amount which shall be exempted per head having regard to the travel concession or assistance granted to the employees of the Central Government, shall not be included. By virtue of the provisions of section 10(5), rule 2B is issued prescribing the conditions for the purpose of section 10(5). Section 10(5) clearly provides for prescribing the conditions regarding the amount which shall be exempt from tax having regard to the travel concession or assistance granted to the employees of the Central Government. It is by virtue of this provision that rule 2B has been issued. The petitioner was not able to point out any illegality in regard to the condition imposed in section 2B(a) as it stood prior to 1-10-1997. In these circumstances, there was no merit in instant writ petition and same was, accord­ingly, dismissed. [Para 2]

K. Shrihari Rao and K.R. Raghunath for the Petitioner. H. Sivaraman and George K. George for the Respondent.

Judgment

1. The petitioner at the time of filing the writ petition was an officer of the State Bank of India. As per service conditions of the officers of the bank they are entitled to LTC facilities including travel by air. The petitioner has filed this writ petition challenging the provisions of Rule 2B(a) of the Income-tax Rules making the difference between the air travel charges and the railway first class AC charges exigible to tax under the Income-tax Act, 1961 (for short ‘the Act’). According to the petitioner, this rule is ultra vires the provisions of section 10(5) of the Act.

2. I have heard Sri K. Shrihari Rao, learned counsel for the petitioner and Sri George K. George, learned standing counsel, Government of India (Taxes) appearing for the respondents. The petitioner being an officer of the State Bank of India is enti­tled to the expenses for air travel by availing the leave travel facility without any limitation. The grievance of the petitioner, as already noted, is that the difference between the air travel fair and the first class AC fair by rail is being assessed to income-tax. The question regarding exemption is a matter which is covered by the provisions of the Income-tax Act. Unless there is an exemption in respect of the amount received from the bank for the leave travel facility availed, the petitioner cannot claim any exemption from tax in respect of the amount received. Sub-section (5) of section 10 of the Act provides that in computing the total income of a previous year in the case of an individual the value of any travel concession or assistance received by or due to him (a) from his employer for himself, his spouse and children, in connection with his proceeding on leave to his home-district in India and (b) from his employer or former employer for himself, his spouse and children, in connection with his proceeding to his home-district in India after retirement from service or after the termination of his service subject to such conditions as may be prescribed including the number of journeys and the amount which shall be exempted per head having regard to the travel concession or assistance granted to the employees of the Central Government shall not be included. By virtue of the provisions of section 10(5) of the Act rule 2B of the Income-tax Rules is issued prescribing the conditions for the purpose of section 10(5). Section 10(5) which is referred to above clearly provides for prescribing the conditions regarding the amount which shall be exempt from tax having regard to the travel concession or assistance granted to the employees of the Central Government. It is by virtue of this provision rule 2B has been issued. The petitioner is not able to point out any illegality in regard to the condition imposed in section 2B(a) as it stood prior to 1st October, 1997.

In these circumstances, I do not find any merit in this writ petition. It is accordingly dismissed.

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