To discharge specific responsibilities, often employers allow certain additional allowances as conveyance, entertainment, periodicals etc to help employee discharge duties efficiently. Insurance companies generally allow higher conveyance allowance to help an employee meet additional expenditure incurred for field duties.

Such allowances are exempt from income tax and often assessing officers don't proceed to tax the same in the hands of employees, to the extent these are incurred. However, in some stray cases, some ‘overzealous’ assessing officers seek to tax the same in the hands of employees.

In a similar case, decision of Rajasthan High Court ruled the same in favor of employees. The issue came up that whether allowing or disallowing of additional conveyance allowance received by employee from employer is not dependent on any interpretation of statute so as to give rise to any question of law, but is dependent on finding of facts about utilization of such allowance by recipient.

Facts of the case are that the Assessee, a Development Officer with LIC, received additional conveyance allowance from his employer and claimed same as not taxable under section 10(14). Assessing officer held the same as taxable and accordingly raised the demand.

On an appeal, the Tribunal, on basis of certificate issue by LIC, came to conclusion that said amount had really been spent by Assessee wholly, necessarily and exclusively for discharging his official duties and allowed Assessee’s  claim.

On further appeal by the department in High Court, Ld High Court held that finding recorded by tribunal was finding of fact and did not give rise to any question of law.

It is noteworthy that In this case, the deduction was allowed even though Assessee did not submit proofs towards the expenses incurred. The Assessing Officer had disallowed the claim on the ground that the Assessee had not produced any evidence in support of the fact that additional conveyance allowance received by him for the purpose of his official duties was actually utilized by him for that purpose.

The Commissioner too upheld the order of the Assessing Officer. On further appeal, the Tribunal on the basis of certificate issued by the LIC to the Assessee and certain decisions, held that the additional conveyance allowance had been wholly, necessarily and exclusively spent by the Assessee for the purpose of discharging his duties.

Accordingly, it directed that deduction under section 10(14) be allowed to the Assessee in respect of said additional conveyance allowance.