JUDGMENT - F. I. REBELLO, J. :---The question to be considered and decided in this petition is whether Conveyance Allowance paid to the members of the petitioners Association is exempted from payment of tax under section 10(14) of the Income Tax, 1961.

2.Section 10(14) of the Income Tax Act, 1961 reads as under :--

(14)(i) any such special allowance or benefit, not in the nature of a perquisite within the meaning of Clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, (as may be prescribed), to the extent to which such expenses are actually incurred for that purpose ;

(ii) any such allowance granted to the assesses either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, (as may be prescribed and to the extent as may be prescribed).

(Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to the place of his posting or residence.

Then Rule 2-BB(1)(c) of the Income Tax Rules reads as under :

"Any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit ;

PROVIDED that free conveyance is not provided by the employer."

3.In the present petition we are required to consider section 10(14)(i) read with Rule 2-BB(1)(c) and to decide whether conveyance allowance of Rs. 100/- given to the employees to meet expenses incurred in performance of duties of an Office. It would be clear from following discussions that payment of Rs. 100/- as conveyance allowance is not granted to meet expenses incurred in performance of duties of an office and has no connection with the expenditure incurred on conveyance in performance of duties of an office.

4.The petitioner is an Association of Class - I Officers in employment of respondent No. 1 Corporation. By a notification dated 18th July 1996 rules were framed known as the Life Insurance Corporation of India Class-I Officers (Revision of Terms and Conditions of Service) (Amendment) Rules, 1996 to further amend the Life Insurance Corporation of India Class - I Officers (Revision of Terms and Conditions of Service) Rules 1985, the amended rules shall hereinafter be referred to as the rules. By virtue of Clause 11 of the said Rules, Rule 9b has been introduced which reads as under :--

"9b. Conveyance Allowance :

Every Class I Officer, other than an officer who is in receipt of any conveyance allowance under any of the schemes of the Corporation shall be paid conveyance allowance of Rs. 100/- per month."

It is the contention of the petitioner that in 1996 pursuant to negotiations between representative of employees including petitioner and the Management of respondent No. 1 a Wage Settlement took place whereby various terms and conditions of the service were amended/revised. One such service condition viz. Rule (9b) provided that an amount of Rs. 100/- be paid as Conveyance Allowance with retrospective effect from 1st August 1994 to enable the Officers to meet the expenditure incurred on conveyance in performance of duty. As a result of the said decision every employee was to get Rs. 3200/- for 32 months period from 1st August 1994 to 31st March 1997. Petitioner contends that it was understood by all concerned that the allowance would be exempted from income tax. In fact the respondent No. 1 according to the petitioner issued a circular/fax message on 21st March 1996 expressly endorsing this position. It is further contended that in January 1997 Yogakshema an official publication of respondent No. 1 carried an article clarifying

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