COMMISSIONER OF INCOME TAX Vs. P GENCY

JUDGEMENT

(1.) THIS is a reference under S. 256(1) of the Income tax Act, 1961, made at the instance of the CIT. The question referred to us is as follows :

(2.) THE relevant facts are as follows. The year with which we are concerned is the asst. year 1971 72. The assessee was the Works Manager of the West End Watch Company since 1951. During the course of his duties, he was required to move from place to place for attending to several matters such as selection and purchase of materials, attending to customs clearance and so on. His employer paid him Rs. 200 per month to meet his outdoor travelling allowance. According to the assessee, this was a fixed allowance for meeting travelling expenses in order to save the botheration of his submitting vouchers for actual conveyance expenses incurred by him at the end of every day and avoiding several entries having to be made in the books. The assessee further stated that the actual expenses incurred by him for the said purposes always exceeded the amount paid to him. Right from the first year in which this allowance was paid to the assessee up to the year 1961 62, the ITO concerned took the view that it was exempt under S. 4(3)(vi) of the Indian IT Act, 1922, and in respect of the assessment years from 1962 63 up to the assessment year in question, a similar deduction was given under S. 10(14) of the IT Act, 1961. The assessee maintained a car of his own during the relevant previous year and claimed deduction of Rs. 2,400 under S. 16(iv) of the IT Act, 1961, in the year of assessment. The ITO as well as the AAC rejected this claim. On appeal to the Tribunal, the Tribunal took the view that the assessee was entitled to claim this deduction. On a plain reading of the statement of the case, it is clear that the Tribunal has accepted the explanation of the assessee that the amount of Rs. 200 per month paid to him by way of allowance fell short of the actual travelling expenses incurred by him in attending to the work of his employer.

(3.) IN the result, the question referred to us is answered in the affirmative and in favour of the assessee. There will be no order as to costs.