Why Is Sumptuary Allowance Tax Free For High Court & Supreme Court Judges But Not For Others?

Whether sumptuary allowance and medical allowance paid to an Judicial officer/Judge of Subordinate Court ie., Munsiff Magistrate & Civil Judge (Sr.Dn.) & J.M.F.C., is liable for Income-tax or not. If not what is the rule or Section providing such relaxation. PRASAD C, Chikmaglur

Income tax Act does not provide any exemption to any allowance to Judges of Courts in India. However ,judges of Supreme Court and High Court get , certain specific allowance which are also made exempt from tax under different Act. These are

1. Any allowance paid to High Court Judges under section 22A(2) of the High Court Judges(Conditions of Service ) Act ,1954 and

2. Sumptuary allowance given to Supreme Court Judges under section 23B of the Supreme Court Judges (Conditions of Service ) Act 1958 and to High Court Judges under section 22C of High Court Judges(Conditions of Service ) Act ,1954 .

As is clear that the exemption of those allowance are not exempt for any other judges who are not covered under those provision as is given above. So any judge other than High Court and Supreme Court can not claim exemption of House Rent or Sumptuary allowance as tax free.Not even retired judges of High Court or Supreme Court.

This question was raised in Justice Challa Kondaiah (Decd.) v. Commissioner of Income-tax [2001] 252 ITR 854 (AP) in which the High Court held that

In appreciating the contention of learned counsel for the petitioners, should it be noticed at the threshold that the Income-tax Act does not provide any exemption in respect of house rent allowance payable to judges of High Courts. It is only the High Court Judges (Conditions of Service) Act, 1954, has made a provision exempting the house rent allowance payable to the High Court judges from income-tax. Sections 22A and 22D of the High Court Judges (Conditions of Service) Act, 1954, at the relevant period read :

“22A. (1) Every judge shall be entitled without payment of rent to the use of an official residence in accordance with such rules as may, from time to time, be made in this behalf.

(2) Where a judge does not avail himself of the use of an official residence, he may be paid every month an allowance of ten thousand rupees only.

22D. Notwithstanding anything contained in the Income-tax Act, 1961,-

(a) the value of rent-free official residence provided to a judge under sub-section (1) of section 22A or the allowance paid to him under sub-section (2) of that section ;

(b) the value of the conveyance facilities provided to a judge under section 22B ;

(c) the sumptuary allowance provided to a judge under section 22C ;

(d) the value of leave travel concession provided to a judge and members of his family,

shall not be included in the computation of his income chargeable under the head ‘Salaries’ under section 15 of the Income-tax Act, 1961.”

The word “judge” is defined in section 2(g) of the Act as under :

” ‘judge’ means a judge of a High Court and includes the Chief Justice ; an acting Chief Justice, an additional judge and an acting judge of the High Court ;”

It is quite clear from the definition of the word “judge” as defined under section 2(g) of the Act, that judge means only a sitting High Court judge, not a retired High Court judge. Therefore, retired Chief Justices and judges of the High Court cannot be brought under the exemptability clause contained under section 22D of the Act. If that is so, simply because the petitioner was appointed as Member, Commission of Enquiry, on the basis that he earlier held the post of Chief Justice of a High Court, he could not claim that he should be treated as a sitting Chief Justice or a judge of a High Court so as to entitle him to seek exemption from payment of income-tax in respect of the house rent allowance received by him as a Member, Commission of Enquiry on par with exemption provided to the High Court judges under section 22D of the Act. If a retired Chief Justice or a retired judge of a High Court is appointed by the State Government or the Central Government for any purpose or to any post, those appointments would be under the Government of India or the concerned State Government as the case may be, and those posts cannot be treated as constitutional posts of Chief Justice or judge of a High Court to attract the provisions of section 22D of the High Court Judges (Conditions of Service) Act, 1954. With the retirement, a Chief Justice or a judge of a High Court ceases to be the Chief Justice or a judge of a High Court, as the case may be, and his reappointment by the Government for any purpose or to any post would not revive his status as Chief Justice or judge of a High Court. It is equally important to notice that the State Government is incompetent to grant exemption from payment of tax in respect of house rent allowance paid by it to its appointees. As noticed above, the Income-tax Act as such does not grant any exemption from payment of income-tax in respect of the house rent allowance paid to the High Court judges. A retired judge who has been appointed by the State Government or the Central Government to any post cannot be brought under the purview of the High Court Judges (Conditions of Service) Act, 1954, and he, therefore, cannot claim exemption from income-tax in respect of the house rent allowance received by him as an appointee to such post. Therefore, the opinion of the Commissioner of Income-tax impugned in this writ petition is un-exceptionable.

That answer your question. Sumptuary allowance is fully taxable in case of judges of lower court.