SHYAMAL KUMAR SEN, J.

( 1 ) THE facts found and proceedings culminating in the instant reference are, inter alia, that R. R. Bajoria, the assessee, is a member of the Indian Revenue Service. According to the terms and conditions of his service, he is liable to be transferred and posted in any city or town within the Union of India. In respect of the assessment years 1970-71, 1971-72 and 1972-73, the corresponding accounting years ending on the 31st March, 1970, 1971 and 1972, the assessee claimed that the amounts received by him as city compensatory allowance were not to be included in the total income of the assessee. The Income-tax Officer, Central Salary Circle, rejected the claim of the assessee.

( 2 ) THE assessee preferred an appeal before the Appellate Assistant Commissioner and reiterated that the amount received by him by way of city compensatory allowance was not taxable. The Appellate Assistant Commissioner, following an earlier decision of the Tribunal in Income-tax Appeal No. 3074 (Bom) of 1970-71, held that the said city compensatory allowance was not taxable and should not be included in the total income of the assessee and that having regard to the provisions of Sections 10 (14) and 16 (v) of the Income-tax Act, 1961, the amount paid to the assessee as city compensatory allowance could not be brought to tax and the appeals of the assessee were allowed by the Appellate Assistant Commissioner by a consolidated order.

( 3 ) BEING aggrieved by the said decision of the Appellate Assistant Commissioner, the Revenue preferred an appeal before the Income-tax Appellate Tribunal. It was urged on behalf of the Revenue before the Tribunal that the finding of the Appellate Assistant Commissioner was not sustainable in law having regard to the amendments made in the provisions of Section 10 (14) of the Act by the Finance Act, 1975. By the said amendment, an Explanation had been inserted to the said Section 10 (14) of the said Act which read as follows:"for the removal of doubts, it is hereby declared that any allowance granted to the assessee 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 shall not be regarded, for the purposes of this clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties. "

( 4 ) IT was contended that the said Explanation be deemed to have been there always and accordingly the assessee was not entitled to the relief claimed.

( 5 ) IT was also held that in view of the aforesaid amendment, the claims of the assessee were not tenable as under the said Explanation, no allowance granted to the assessee to meet his personal expenses where the duties of his office or employment were ordinarily performed or at the place where the assessee ordinarily resided would not be regarded as a special allowance to meet the expenses wholly, necessarily and exclusively incurred in the performance of the duties of the assessee.

( 6 ) THE assessee, on the other hand, contended that the matter should be examined in the light of the scheme of the Income-tax Act read with the Fundamental Rules. On the basis of the Fundamental Rules governing the service conditions, the assessee claimed to be entitled to the relief. It was contended that the said amendment would not be operative in the case of the assessee. The Tribunal accepted the contentions of the assessee and held in his favour and against the Revenue.

( 7 ) THE Tribunal accepted the contentions of the assessee. The Tribunal considered the scheme of the Income-tax Act as also the fundamental rules governing the services of the assessee under which the said allowance was paid and held that the said city compensatory allowance did not confer any advantage on the assessee and could not be charged to tax under Sections 4 and 5 of the Income-tax Act, 1961. The Tribunal als

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