Judgment :- All these Original Petitioners are filed by Associations representing the LIC Development Officers challenging the periodical circulars issued by the Executive Director (Marketing) of the LIC of India providing guidelines for deduction of income tax at source on additional conveyance allowance paid to the LIC Development Officers. O.P.No. 7457 of 1990 was filled in the year 1990 challenging Ext.P1 circular dated 3.3.1987 produced in that O.P. pending this O.P., the very same petitioner filed O.P.No. 33745 of 2001 challenging later circular, produced as Ext.P2 in that O.P., which was issued in modification of the earlier circular. O.P.No. 7153 of 2000 is filed by another organization of LIC Development Officers challenging the same circulars and for the same relief. I have heard counsel for the petitioners and standing counsel for the Income-tax Department and counsel for the LIC. 2. Petitioners’ contention is that additional conveyance allowance paid to them qualifies for exemption under Sec. 10(14) of the Income-tax Act, and therefore the direction of the Executive Director of LIC to deduct income tax in accordance with the norms prescribed by the prescribed by the department circular is unauthorized and without jurisdiction. LIC of India on the other hand contended that as employer they are bound to deduct income-tax at source from the payment of salary in terms of Section 192 of the Income-tax Act. They have further contended that salary, perquisites, etc., under the Income-tax Act have definite meanings and accordingly the LIC of India took guidelines from the Central Board of Direct Taxes for the purpose of deduction of income-tax. So far as Conveyance allowance and additional conveyance allowance, etc., are concerned the impugned circulars are issued by the Executive Director of the LIC after taking instructions from the Central Board of Direct Taxes. Standing counsel for the Income-tax Department on the other hand contended that additional conveyance allowance forms part of salary and deductions have to be made towards income-tax at source after providing for exemption in terms of Sec. 10(14) of the Income-tax Act read with Rule 2(BB) of the Income-tax Rules, prescribed there under. 3. I have gone through the circulars or instructions issued by the Executive Director of LIC providing guidelines for deduction of income-tax at source in a limited way mainly based on performance of the officers concerned. 3. I have gone through the circulars or instructions issued by the Executive Director of LIC providing guidelines for deduction of income-tax at source in a limited way mainly based on performance of the officers concerned. Even though LIC has stated that they have taken instructions from the Central Board of Direct Taxes, no circular/proceeding is seen issued by the Central Board of Direct Taxes either under Section 119 or under any other provisions of the Act. I do not think the exemptions and deductions contemplated in the circular issued by the Executive Director, admittedly based on the volume of business transacted by the Development Officers, are consistent with the provisions of the Income-tax Act and Rules. The relevant section, namely, Sec.10 (14) and Rule 2(BB) are extracted hereunder for easy reference: 14 (i) any such special allowance or benefit, not being 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 assessee 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. 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. R.2BB (1) For the purposes of Sub-clause (i) of clause 14 of Section 10, prescribed allowance, by whatever name called, shall be the following, namely:- (a) any allowance granted to meet the cost of travel on tour or on transfer; (b) any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty; (c) any allowance granted to meet the expenditure incurred or conveyance in performance of duties of an office or employment of profit. Provided that free conveyance is not provided by the employer. (d) any allowance granted to meet the expenditure incurred on a helper where such helper is engaged for the performance of the duties of an office or employment of profit; (e) any allowance granted for encouraging the academic, research, and training pursuits in educational and research institutions. (f) any allowance granted to meet the expenditure incurred on the purchases or maintenance of uniform for wear during the performance of the duties of an office or employment of profit. Explanation….” (2) ……….” The exemption provided under Section 10(14) is not limited to additional conveyance allowance or conveyance allowance. It provides for exemption for special allowances other than perquisites defined under Section 17(2) of the II Act, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit. Of course the exemptions are subject to a ceiling that has been prevailing under the Rules. Rule 2(BB)(1)(c), in so far as conveyance allowance is concerned, provides for exemption of only allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit. There is a further limitation that no exemption is available to an employee in a case where the employer is providing free conveyance to the employee. On a reading of the section the rule prescribed there under, namely, R.2BB(1)(c) is absolutely consistent with the section. There is a further limitation that no exemption is available to an employee in a case where the employer is providing free conveyance to the employee. On a reading of the section the rule prescribed there under, namely, R.2BB(1)(c) is absolutely consistent with the section. The exemption contemplated is only in respect of expenditure for conveyance incurred by the employee and reimbursement by the employer. The position therefore is that actual expenditure incurred by the employee and reimbursed by the employer on being satisfied that the expenditure is incurred towards conveyance in the performance of duty of office shall not attract income-tax. It is conceded that LIC development officers are entitled to certain conveyance allowance, and besides this, they are also entitled to additional conveyance allowance. The claim of exemption raised in the O.Ps. does not pertain to conveyance allowance paid to the Development Officers, but is limited to the eligibility for exemption of “additional conveyance allowances”. Exemption is available to the additional conveyance allowance in terms of section 10(14) read with Rule 2BB (1)(c) to the extent of actual expenditure for conveyance him by the employer, namely, LIC of India. The issue arose in Madras where the LIC’s return claiming exemption from the deduction of income tax on additional conveyance allowance was rejected by the Assessing Officer and in turn by the Commissioner of Income-tax. When this was challenged before the Madras High Court, the Madras High Court in the decision in LIC Of India V. Commissinoer Of Income Tax, (2000) 245 I.T.R. 224 referred the matter back to the department for deciding the issue with reference to Rule 2(BB) of the Income-tax Rules as the same was not considered by the department in the proceedings impugned in Court. The finding of the learned single Judge in that case was that the department went by the earlier decision of the Madras High Court in CIT v. E.A.Rajendran (1999) 235 I.T.R 514 (MAD.) wherein the rule was not considered at all and decision in that cease was in the context of incentive bonus. The finding of the learned single Judge in that case was that the department went by the earlier decision of the Madras High Court in CIT v. E.A.Rajendran (1999) 235 I.T.R 514 (MAD.) wherein the rule was not considered at all and decision in that cease was in the context of incentive bonus. It is seen that the issue directly arose in the decision of the Bombay High Court in LIFE INSURANCE CORPORATION CLASS I OFFICERS (BOMBAY) ASSOCIATION V. LIFE INSURANCE CORPORATION OF INDIA (1998) 229 I.T.R. 510, wherein the Bombay High Court after considering Rule 2(BB) of the I.T. Rules held that in order to claim exemption, the conveyance allowance must be necessarily expended for meeting expenses wholly and necessarily incurred or to be incurred in the performance of duties of an office. In order to claim exemption, it was held, the assessee must satisfy who tests namely, that they are expenses wholly and necessarily incurred in the performance of the duties of the office, and, secondly, the expenses incurred by the assessee were for the discharge of his duties under the conditions of service with the employer. I do not think Section 10(14) read with Rule 2(BB) (1) (c) is capable of different meaning than what is assigned to it by the Bombay High Court in the said decision. However, I do not think that this Court should examine the correctness or property of the two impugned circulars issued by the Executive Director of LIC who is stated to have issued the same after consulting tax experts, and Central Board of Direct Taxes. These circulars or guidelines are not statutory and have no force of law. It only serves as guidelines from management to subordinate officers; particularly to salary-disbursing department and can neither bind the income tax department, nor the LIC development officers. The administration of Income-tax Act is by statutory authorities, who have been given definite powers. While CBDT has jurisdiction under Section 199 to issue circulars for the administration of statute, it cannot authorize employers to issue circulars on behalf of CBDT. Circulars issued by the Executive Director of LIC do not have force of circulars issued by the CBDT under Section 199 of the Act. While CBDT has jurisdiction under Section 199 to issue circulars for the administration of statute, it cannot authorize employers to issue circulars on behalf of CBDT. Circulars issued by the Executive Director of LIC do not have force of circulars issued by the CBDT under Section 199 of the Act. Of course since the LIC has operation all over India, it is upto them to approach CBDT who are free to issue any circular which will have binding force on the subordinate officers. So far as deduction of income-tax at source is concerned, especially pertaining to an item of income, which is claimed as exempt by the employee, I find section 197 grants specific power to the assessing officer on an application by the assessee to issue certificate authorizing payment without deduction of tax or on deduction of tax at rates below the prescribed limit, if the assessing officer is satisfied that the assessee is eligible for exemption full or partial. Therefore the normal procedure under the Act is for each and every LIC Development officer to approach the assessing officer with an application under Sec.197 and demonstrate that the additional conveyance allowance is not exempt fully or partly and on being satisfied the assessing officer has to necessarily issue the certificate. On the other hand, if deduction is made, it is for the assessee to claim exemption in the assessment by filling returns and claim refund of tax wherein also the Assessing Officer will consider the eligibility for exemption in the assessment, and if assessee is aggrieved, he is free to file appeal before the appellate authority and get the matter settled. It is therefore either for the LIC to take up the matter before the CBDT for appropriate circular under Sec.118 of the I.T. Act and in that event CBDT will issue circular, or otherwise, since all the LIC Development Officers are assessees they are free to make individual applications before the Assessing Officer concerned in terms of Section 197 and obtain certificate which will be followed by LIC in regard to tax deduction at source. I do not think there is any need for this Court to go into the correctness of the two impugned circulars issued by the Executive Director of the LIC of India on deduction of income-tax, which as already held serves only as guidelines to subordinate officers. I do not think there is any need for this Court to go into the correctness of the two impugned circulars issued by the Executive Director of the LIC of India on deduction of income-tax, which as already held serves only as guidelines to subordinate officers. It is for the Income-tax Department to scrutinize the correctness of TDS made either while considering the LIC’s TDS returns or while assessing the income of LIC’s TDS returns or while assessing the income of LIC development officers. Going by the interpretation placed on Sec.10(14) and Rule 2BB(1)(c) by this Court above, exemption on additional conveyance allowance has to be considered with reference to proved facts of each assessee (LIC Development Officer) and therefore the issue cannot be decided by this Court in OPs filed by representative bodies. O.Ps. are disposed of with the above observations.