INCOME TAX OFFICER Vs. N S S MURTHY
LAWS(IT)-1985-4-12
INCOME TAX APPELLATE TRIBUNAL
Decided on April 26,1985

Appellant
VERSUS
Respondents

JUDGEMENT

K.B. Menon, Judicial Member - (1.)THE appeals by the department and the cross-objections by the assessee relate to the assessment years 1979-80 and 1980-81.
(2.)The assessee is an employee of Tata Finlay Ltd., Munnar, hereinafter referred to as 'the company'. The leave rules of the company provided for granting 30 days' leave to a member of the staff each year. The leave rules also provided for paying to the assessee travelling and incidental assistance up to a maximum of Rs. 2,400 each for adult and Rs. 2,400 per child over 12 years of age up to a maximum of 21 years and/or Rs. 1,200 per child below 12 years. For each of the accounting years relevant to the assessment years under appeal, the assessee was paid Rs. 9,600 as leave travel assistance. In the original assessments for these two assessment years, which were completed on 25-7-1980 and 17-10-1980, the leave travel assistance was treated as exempt under Section 10(5) of the Income-tax Act, 1961 ('the Act'). The assessments were completed under Section 143(1) of the Act. These assessments were rectified under Section 154 of the Act on the ground that an error apparent from the record had occurred in granting exemption with regard to the entire amount of leave travel assistance. According to the ITO, the assessee had incurred only an expenditure of Rs. 4,080 for the to and from journey to Bombay and back. In both these assessment years, the assessee had proceeded to Bombay during the leave period. The rest of the amount constituted boarding and lodging expenses. According to the ITO, this is a benefit taxable as a perquisite in the hands of the assessee and in the original assessments, the entire amount was wrongly allowed as a deduction. Therefore, by the rectification orders passed, the ITO disallowed Rs. 5,520 out of the leave travel assistance amount.
The AAC held that any amount received from an employer in connection with proceeding on leave has to be allowed as a deduction under Section 10(5) that the section does not require the ITO to find out if the amount had been fully utilised in connection with the trip made by the employee and his family during the leave period. He, therefore, cancelled the rectification orders passed by the ITO. The AAC did not record his finding on an alternative contention raised by the assessee that there was no mistake apparent from the record which could have been rectified under Section 154.

(3.)IN its appeals, the department questions the correctness of the finding of the AAC that the entire leave travel concession amount was exempt under Section 10(5). IN the cross-objections, the assessee contends that the AAC erred in not holding that there was no error apparent from the record which could have been rectified under Section 154.


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.