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Andhra Pradesh High Court
Judges : S.S.M.QUADRI, T.V.NARAYANA
S.Obul Reddi, Hyderabad - Appellant
Versus
Chairman, Central Board of Direct Taxes - Respondent
Decided On : 08-23-96
INCOME TAX - EXEMPTION - HOUSE RENT ALLOWANCE - RETIRED CHIEF JUSTICE APPOINTED AS CHAIRMAN OF NATIONAL INDUSTRIAL TRIBUNAL - WHETHER ENTITLED TO EXEMPTION FROM INCOME TAX ON HOUSE RENT ALLOWANCE - SECTION 22-D OF THE HIGH COURT JUDGES (CONDITIONS OF SERVICE) ACT, 1954 - INTERPRETATION - APPLICABILITY TO RETIRED JUDGES RE-EMPLOYED AS CHAIRMEN OF TRIBUNALS - HELD, EXEMPTION AVAILABLE TO PETITIONER.
Fact of the Case:
The petitioner, a retired Chief Justice of the High Court of Andhra Pradesh, was appointed as the Chairman of the National Industrial Tribunal (NIT) by the Government of India. The terms and conditions of his appointment included a rent-free furnished accommodation or House Rent Allowance (HRA) at 121/2% of pay in lieu thereof. Subsequently, instead of 121/2%, he was being given HRA @ Rs. 2,500/- per month. The petitioner claimed exemption from income tax on the HRA, relying on Section 22-D of the High Court Judges (Conditions of Service) Act, 1954 (Act 28 of 1954). The Income-tax Officer rejected the petitioner's claim, holding that Section 22-D was not applicable to retired Judges re-employed as Chairmen of Tribunals.
Finding of the Court:
The High Court held that the petitioner was entitled to exemption from income tax on the HRA paid to him by the Government of India on his re-appointment as Chairman of the NIT. The Court interpreted Section 22-D of the Act to include retired Judges re-employed as Chairmen of Tribunals within its ambit. The Court held that the terms and conditions of appointment of the petitioner were analogous to those of a sitting Judge, and that he was entitled to avail all the benefits which he was earlier enjoying as Chief Justice in regard to pay and allowances. The Court also noted that other retired Judges had been granted exemption from income tax on HRA, and that there was no rational basis to single out the petitioner.
Issues: Whether Section 22-D of the High Court Judges (Conditions of Service) Act, 1954 applies to retired Chief Justices and Judges of the High Court re-employed as Chairmen of Tribunals.
Ratio Decidendi: The Court held that Section 22-D of the Act applies to retired Chief Justices and Judges of the High Court re-employed as Chairmen of Tribunals. The Court interpreted the provisions of Section 22-D in a broad and purposive manner, holding that the exemption from income tax on certain perquisites received by a Judge should also apply to retired Judges functioning as Presiding Officers of Commissions of Enquiry or Chairmen of Tribunals. The Court reasoned that retired Judges appointed to such positions are placed in the same position as sitting Judges and are given the same pay, allowances, and perquisites. Therefore, the Court held that it would be discriminatory to deny retired Judges the benefit of Section 22-D.
Final Decision: The Court allowed the writ petition and declared that the HRA paid to the petitioner during the relevant period at the rate of Rs. 2,500/- P.M. is exempt from income tax under Section 22-D (a) of the Act.
( 1 ) THE petitioner seeks a writ of mandamus to declare that the provisions of section 22-D of the High Court Judges (Conditions of Service) Act, 1954 (Act 28 of 1954), for short "the Act" are applicable to the case of the petitioner and that the House Rent Allowance @ Rs. 2,500/- per month paid by the Government of india to him as the Chairman of the National Industrial Tribunal (for short "nit")/ is not liable to be taxed under the Income-tax Act, 1961,
( 2 ) THE petitioner is a retired Chief Justice of the High Court of Andhra pradesh. After his retirement, he was appointed as the Chairman of the national Industrial Tribunal by the Government of India in their resolution No. F. 10 (21)87/rrb dated November 26,1987, which was also published in the gazette on the same day. The terms and conditions of his appointment as the chairman of NIT are incorporated in the letter of the Ministry of Finance, government of India, dated December 30,1987. By the terms of appointment the petitioner was entitled to rent free furnished accommodation or House Rent allowance at 121 /2% of pay in lieu thereof. Subsequently, instead of 121 /2%, he was being given House Rent Allowance @ Rs. 2,500 /- per month. The petitioner says that having regard to the guidelines issued by the Government of India with regard to fixation of pay and terms and conditions of Retired Judges of the supreme Court/high Court on re-employment on Commission/committee of enquiries set up by the Government of India and having regard to the terms of his appointment, the House Rent Allowance is exempted from income-tax. The petitioner s request for exemption of House Rent Allowance was turned down by the Director, Department of Economic Affairs (Banking Division), Ministry of Finance, Government of India after consultation with the Board of Direct taxes and the same was communicated to the petitioner by letter dated August 10,1988. The petitioner has also given instances of Sri Justice A. Sambasiva Rao, retired Chief Justice, who was re-employed as Lok Ayukta; Sri Justice Koka ramachandra Rao, Retired Chief Justice, who was appointed as One-Man commission of Enquiry as koka Ramachandra Rao Commission of Enquiry ; sri Justice P. Rama Rao, Retired Judge of the High Court of Andhra Pradesh, who was appointed as Chairman, Pollution Control Board and Sri Justice bakshi, Retired Judge of the Allahabad High Court, who was re-employed as chairmanof the Andhra Pradesh Administrative Tribunal, who were not taxed in respect of House Rent Allowances. In the circumstances, he seeks the writ of mandamus indicated above.
( 3 ) THE Income-tax Officer, Ward 4 (3), Income Tax Department, respondent no. 4, alone filed counter-affidavit. The material facts are not disputed. He submits that neither in the Income-tax Act, 1961 nor in the High Court Judges (Conditions of Service) Act 1954, as amended from time to time, it is provided that the High Court Judges, after retirement and re-employment, are entitled to exemption of House Rent Allowance from Income-tax like the sitting Judges. It is further stated that the petitioner himself filed his return of income for the assessment year 1989-90 l but did not claim any deductions from salary other than standard deduction and profession tax; since the petitioner himself did not claim any deduction towards House Rent Allowance paid by him, the question of exempting the same and refunding the tax does not arise. In regard to the cases of the other Judges, it is admitted mat in their cases House Rent Allowance was not assessed to tax but it is justified on the ground that the original assessments of those retired Judges were completed under Section 143 (1) of the income-tax Act. On those facts he prays for dismissal of the Writ Petition.
( 4 ) MR. Y. Ratnakar, the learned Counsel for the petitioner, has contended that the terms and conditions of appointment of the petitioner as Chairman, national Industrial Tribunal are analo
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