Section 10(14)

Section 10(14) — the law in short

What the courts have decided on section 10(14), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT (TDS) v Oil and Natural Gas Corporation Ltd High CourtHelps taxpayerValidity unconfirmed
  I am the employer. I treated the uniform allowance as exempt on my employees' self-certification and did not call for bills. The TDS officer has made me an assessee in default under s.201. Was I obliged to verify that each employee actually spent the money?
  No. The High Court held that the employer's liability under s.192 is to deduct tax to the extent of the employee's taxable income, and that where part of that income is exempt there is no liability to deduct from it. A certificate from the employee that he has incurred the expenditure is adequate for the disbursing officer when computing the tax deductible; whether the employee can in fact substantiate the claim is a matter for the employee's own assessment and has no bearing on the employer's estimate. The demand under s.201(1) and the consequential interest were rightly deleted.
• National Federation of Insurance Field Workers of India v Union of India High CourtHelps departmentHigh Courts differ
  LIC has started deducting tax on the conveyance allowance and additional conveyance allowance paid to development officers. Can the employees stop the deduction on the footing that the allowances are exempt under s.10(14)?
  The Orissa High Court said no and dismissed the writ petition. It held that after the 1987 amendment to s.10(14) and the insertion of Rule 2BB, the entire conveyance allowance and additional conveyance allowance are not exempt unless the expenses are actually incurred and that is proved to the satisfaction of the Assessing Officer; the employer remains bound to deduct under s.192, and the employee must establish the exemption in his own assessment.
• Life Insurance Corporation of India v Union of India High CourtHelps taxpayerHigh Courts differ
  Is there any High Court authority the other way on the LIC development officers' conveyance and additional conveyance allowance, and how far does it actually go?
  Yes. The Rajasthan High Court held that development officers of the LIC are entitled to claim exemption under s.10(14) for conveyance allowance and additional conveyance allowance, and directed the Department not to insist on the LIC deducting tax at source on them. But the holding is expressly conditional: it applies only upon the officers satisfying that the allowances were actually spent wholly, necessarily and exclusively in the performance of duties, and the Court twice said the ultimate liability of claiming and proving the exemption is on the employee.
• CIT v Gopal Krishna Suri High CourtHelps departmentHigh Courts differ
  I spend my own money to earn the incentive part of my pay. Can I deduct that expenditure before the amount is taxed as salary?
  No. Once a receipt falls under the head Salaries, the only deductions available are those s.16 allows; there is no provision permitting expenses incurred to earn salary to be taken out at the threshold, and 'income' in s.15 does not mean net of such expenses. An LIC development officer's incentive bonus is in the nature of commission, falls within the inclusive definition of salary in s.17(1)(iv), and is taxable in full.
• Smt. Madhu Khatri v DCIT ITATHelps taxpayerValidity unconfirmed
  My employer allowed my HRA and conveyance allowance in Form 16 after taking my Form 12BB with the landlord's name, address and PAN. The CPC has still added them back. Does the employer's Form 16, backed by the Rule 26C declaration, carry the claim?
  On these facts, yes. The Tribunal held the assessee eligible for the s.10(13A) exemption of Rs 7,41,983 and the s.10(14) conveyance allowance of Rs 19,200 because the claim was supported by the requisite documents — bank statement as proof of payment, the declaration under Rule 26C, Form 12BB carrying the landlord's name, address, PAN and rent receipts, and a Form 16 in which the employer had allowed both exemptions after satisfying itself — and because the Commissioner (Appeals) had ignored all of that. The Form 16 was disputed neither by the Commissioner (Appeals) nor by the Departmental Representative.
• DDE ORG Systems (P) Ltd v ACIT (TDS) ITATHelps departmentValidity unconfirmed
  We pay our staff a fixed monthly attire allowance and washing allowance and treat it as exempt under s.10(14). Nobody actually wears a uniform. Can the TDS officer make us an assessee in default?
  Yes. The Tribunal held that Rule 2BB(1)(f) exempts expenditure incurred on the purchase or maintenance of a uniform for wear during the performance of duties, and that where the employees wore dress of different colour, different design and texture according to their own choice, there was no uniform and nothing to show the allowance was granted to meet expenses wholly, necessarily and exclusively incurred in the performance of duties. Tax was required to be deducted on both the attire allowance and the washing allowance, and the employer was in default under s.201(1).

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.