The Hindu Business Line : Exemptions on leave travel

I am working in a multinational company in Bangalore and I am eligible for leave travel concession. I am planning to visit my brother in Ahmedabad, by taking a flight from Bangalore to Pune and from there take a train to Ahmedabad.

On my return journey I am planning to take a direct flight from Ahmedabad to Bangalore. Will the entire travel expense qualify for exemption in respect of the leave travel concession? — Suhail Lakhani

The exemption under Section 10(5) is available only for one travel in a calendar year and for two such travels in a block of four calendar years beginning from the calendar year 1986. Boarding and lodging expenses will not be eligible for the exemption. The maximum amount and the other provisions relating to claim of exemption under Section 10(5) is as follows.

Nature of exemption: Leave travel concession or assistance (subject to prescribed conditions and limited to amount actually spent);

Value of travel concession or assistance received by an individual from his employer for himself and his family in connection with his proceeding: a) on leave to any place in India; b) to any place in India after retirement from service or after the termination of his service shall be exempt.

‘Family’, for the purpose of this provision means — a) the spouse and children; and b) parents, brothers and sisters of the individual wholly or mainly dependent on that individual.

Eligible assessees: Individual salaried employee.

Number of trips: The exemption is available in respect of two journeys performed in a block of 4 calendar years commencing from calendar year 1986.

Where an individual does not avail such travel concession or assistance once or on both occasions during any block of 4 calendar years, the value of travel concession or assistance first availed during first calendar year immediately succeeding block of 4 calendar years shall be eligible for exemption.

This exemption shall be in addition to the exemption that will be available in respect of two journeys for the succeeding block.

Quantum of Exemption: Journey performed by air: Amount not exceeding air economy fare of the national carrier by the shortest route to the place of destination.

Any mode other than air but rail service is available: Amount not exceeding air conditioned first class rail fare by the shortest route to the place of destination;

Rail service not available and recognised public transport system does not exist: An amount equivalent to the air conditioned first class rail fare for the distance by the shortest route as if the journey had been performed by rail.

Rail service not available but recognised public transport system exists: An amount not exceeding the first class or deluxe class fare on such transport by the shortest route.

If you intend to travel to Ahmedabad from Bangalore and thereafter to return from Ahmedabad, irrespective of your onward travel to Pune by air and thereafter by train to Ahmedabad, you can claim only the air fare from Bangalore to Ahmedabad and back by the shortest route and the amount that would be paid if you had travelled by the national carrier.

You may not be eligible in such circumstances to the full amount of expense as an exemption and a part of it may not be eligible for the exemption.

The exemption of course will also be subject to the other conditions and limits in the Section and in any case cannot exceed the amount of leave travel concession received by you from your employer.

I am a salaried employee and I have been submitting my tax returns from 1982.

Few days ago, I received intimation under Section 143(1) raising a demand for Rs 2,243. Scrutiny of the intimation revealed that the mistake has been committed by the tax authorities upon computation of tax.

When I brought this to the notice of the Income Tax Officer, he advised me to file a petition under Section 154. I request you to guide me as how I need to proceed and the form to be used for making such a petition. — Asok Biswas

Section 154 of the Act contemplates rectification of a mistake apparent on the record in an order, intimation or deemed intimation.

If the mistake committed by the Assessing Officer is one which is apparent on the record, he could rectify the same either suo motu i.e., on his own motion or on an application from an assessee.

There is no prescribed form for making an application under Section 154.

The petition for rectification may be made on a plain paper drawing the attention of the officer to the mistake that is apparent and requesting that the same may be rectified and the same petition may also contain a prayer requesting the Assessing Officer not to treat you as an assessee in default until the said rectification is done.

A petition for rectification under Section 154 needs to be made before the expiry of 4 years from the end of the financial year in which the intimation sought to be rectified was passed.

I am aware that until last year a deduction of up to Rs 24,000 could be claimed under Section 80-C in respect of tuition fees paid for children’s education.

I was told that this limit has been raised to Rs 1 lakh. I am also informed that the total deduction under Section 80-C in respect of certain payments and investments cannot exceed Rs 1 lakh.

Is this information correct? — V.S.D. Murthy

Section 80-C permits a claim for deduction in respect of tuition fees paid (excluding any payment towards any development fees or donation or payment of similar nature), whether at the time of admission or thereafter to any university, college, school or other educational institutions situated within India for the purpose of fulltime education of any two children of an individual.

This benefit was earlier available as a rebate under Section 88 from the tax and at that time the said Section did place a limit that the fee that would be eligible for rebate could not exceed Rs 12,000 per child, which would mean that the maximum amount that would be eligible for rebate was restricted to Rs 24,000 since the rebate cannot be claimed in respect of the tuition fees of more than two children.

Rebate under Section 88 is not available from the assessment year 2006-07 (previous year 2005-06) and in its place deduction can be claimed under Section 80-C.

Though it restricts the maximum deduction in respect of tuition fees to such sums paid for not more than two children, there is no limit on the amount of fees that would be eligible for deduction under this Section.

Section 80-C, however, does not permit a deduction in respect of all investments and payments of a sum exceeding Rs 1 lakh.

(Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002)