Sumptuary allowance:- The learned counsel for the assessee has submitted that the sumptuary allowance paid to the judicial Officer is excluded from the income as it is in the nature of entertainment allowance and not an income of the assessee. He has further contended that this allowance is paid only to meet the expenses to be incurred by the Judicial Officer on account of entertainment. He has referred to the CBDT Circular No. 35/32/66-IT(B), dated 24-9-1966 and submitted that the CBDT has clarified that the Sumptuary allowance received by a persons who is in receipt of salary from the Government is required to be deducted in computing the income chargeable under the head salaries. Thus, the learned counsel for the assessee has submitted that this amount cannot be included in the salary of the assessee for the purpose of income tax.
10. On the other hand, the ld. DR has relied upon the orders of the authorities below.
11. We have considered the rival submissions as well as the relevant material on record. The ld. CIT(A) has rejected the claim of the assessee on the ground that the assessee has not brought on record any section, notification, circular etc. as issued by the CBDT. We find that the CBDT vide letter No. 35/32/66-IT(B), dated 24-9-1966 has made it clear that sumptuary allowance has to be treated as an entertainment allowance and accordingly, the said allowance received by a person who is in receipt of salary from the Government, to the extent of such allowance are required to be deducted in computing the income chargeable under head salaries U/s. 16(ii)(a) Thus, the CBDT circular has clarified that this allowance may be regarded as entertainment allowance and exempt from payment of income tax. For ready reference we reproduced the said letter of CBDT as under:-
"Section 17 of the Income Tax Act, 1961- salary perquisite and profits in lieu of salary- sumptuary allowance being in the nature of entertainment allowance not to be included in term "salary" for the purpose of determining perquisite value of residential accommodation under Rule 3(a) of Income Tax Rules.
Letter F. No. 35-32/66-IT(B), Dated 24-9-1966
According to the Board's instruction "sumptuary allowance" has to be treated as an entertainment allowance. In view of this, the sumptuary allowance received by a person, who is in receipt of salary from the Government, to the extent that such allowance is required to be deducted in computing the income chargeable under the head "Salaries" under section 16(ii)(a), may be regarded as an allowance exempted from payment of income-tax. Allowance in the nature of entertainment allowance, to the extent such allowance is deductible under clause (ii) of section 16 is excluded from the term "salary" under Explanation (2)(iv) [as it stood before the amendment made by the Income-tax (Amendment) Rules, 1974], to rule 3(a) of the Income-tax Rules, and, therefore, sumptuary allowance may not be included in the term "salary" for the purposes of said rule."
In view of the above CBDT clarification we hold that the Sumptuary allowance is exempt from payment of income tax and accordingly to be excluded as a deduction while computing income under the head salary.
IN THE ITAT, JAIPUR BENCH, JAIPUR
ITA No. 614/JP/2016
Assessment Year: 2011-2012
Decided On: 19.06.2018
Ajay Godara Vs. The ITO, Ward-1(3)
Hon'ble Judges/Coram:
Vijay Pal Rao, Member (J) and Vikram Singh Yadav, Member (A)
