HC judgment on conveyance allowance

THE MADRAS High Court has held that the additional conveyance allowance paid to an officer for expenses wholly and exclusively incurred in the performance of his duties is not taxable.

According to the Court, the allowance cannot be computed as income for deducting tax. The judgment was based on two writ petitions from the employees of Life Insurance Corporation of India.

The Income-Tax Commissioner had held that additional conveyance allowance paid was taxable as part of salary income based on a reading of Section 10(14) of the Income-Tax Act along with Rule 2 BB. Mr. Justice P. Shanmugam said that the rule imposed an obligation on the Department to look into the claim and grant it, if it came under the prescription.

Rule 2 BB exempts 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.

CLB order on RBF Nidhi

THE Company Law Board (CLB) has passed an order superseding the existing board of directors of the troubled Chennai-based nidhi company, RBF Nidhi Ltd. The CLB, while appointing seven new directors, including the chairman, has directed the new board to file a status report on the affairs of the company and work out a scheme of repayment for the deposits held by it.

The CLB has directed the company to repay by June 30, 2000, fully all the 42,000 depositors with deposits less than Rs. 2,000 and the 10 per cent of others' deposits subject to a minimum of Rs. 2,000. The interest on deposits would be frozen as on November 1, 1998 and depositors over 80 years of age and survivors of deceased depositors would be paid their due in full, subject to a maximum of Rs. 50,000.

The CLB has also directed the nidhi to initiate criminal and civil proceedings against loan defaulters. The new board has been empowered to dispose of the assets of the company along with those given as security in case of defaulting loan accounts. As on date, RBF Nidhi owes Rs. 464 crores to about 1.8 lakh depositors and has advanced more than Rs. 490 crores in loans.