Taxability of DAILY ALLOWANCES ??
This query is : Resolved
14 September 2010
Dear All,
One of my client company is giving Daily Allowances, to Sales Officers, for FOODING & INCIDENTAL EXPENSES e.g. tea exp etc.
This allowance is FIXED on PER DAY basis.
e.g. if duty is performed IN THE CITY OF HEADQUARTER, then 200/- per day Daily Allowance. and if duty is performed OUTSIDE THE CITY OF HEADQUARTER, then 400/- per day Daily Allowance.
NO BILLS ARE SUBMITTED TO THE COMPANY FROM THE EMPLOYEE.
QUESTION : - Will the above mentioned DAILY ALLOWANCES are taxable in the hand's of EMPLOYEE ?
One of my client company is giving Daily Allowances, to Sales Officers, for FOODING & INCIDENTAL EXPENSES e.g. tea exp etc.
This allowance is FIXED on PER DAY basis.
e.g. if duty is performed IN THE CITY OF HEADQUARTER, then 200/- per day Daily Allowance. and if duty is performed OUTSIDE THE CITY OF HEADQUARTER, then 400/- per day Daily Allowance.
NO BILLS ARE SUBMITTED TO THE COMPANY FROM THE EMPLOYEE.
QUESTION : - Will the above mentioned DAILY ALLOWANCES are taxable in the hand's of EMPLOYEE ?
14 September 2010
It is allowance provided for meeting the expenses during offical duty, not taxable in the hands of employee
Message likes :
2 times
16 September 2010
Dear Ramesh Ji..
Under which section it is exempt ?
if it is 10(14), then what is the proof of actual expenditure? if no actual expenditure then it will be fully taxable..
Under which section it is exempt ?
if it is 10(14), then what is the proof of actual expenditure? if no actual expenditure then it will be fully taxable..
16 September 2010
I do agree the Daily allowance covered under sec.10(14) only, what sec.10(14) says
Allowance exempted as lower of following
1.The amount of allowance
2.the amount utlised for the purpose
you refer the case Madanlal Mohanlal Narang vs CIT(2007) 11 SOT 76 (Mumbai)
it states that" the amount of exemption is the amount or the expenses incurred for specific purpose for which allowance given, which ever is lower. however, it is not open to Assessing Officer to call for the details of expenses actually incurred by the assessee unless the allowances are disproportionatly high compared to salary received by the assessee or unreasonable with the nature of the duties performed by the assessee. so providing daily allowance during travel is nature, this will meet the requirement of employee during travel. so it can be claimed exemption which is reasonable
Allowance exempted as lower of following
1.The amount of allowance
2.the amount utlised for the purpose
you refer the case Madanlal Mohanlal Narang vs CIT(2007) 11 SOT 76 (Mumbai)
it states that" the amount of exemption is the amount or the expenses incurred for specific purpose for which allowance given, which ever is lower. however, it is not open to Assessing Officer to call for the details of expenses actually incurred by the assessee unless the allowances are disproportionatly high compared to salary received by the assessee or unreasonable with the nature of the duties performed by the assessee. so providing daily allowance during travel is nature, this will meet the requirement of employee during travel. so it can be claimed exemption which is reasonable
Message likes :
2 times
19 September 2010
Thanks alot for Case Law reference Dear Mr. Ramesh Ji...
Thanks..
Can i get the link of the citation of this case ?
Thanks..
Can i get the link of the citation of this case ?
26 July 2025
Happy to help! The case you mentioned is:
**Madanlal Mohanlal Narang vs CIT (2007) 11 SOT 76 (Mumbai)**
This is a decision from the Income Tax Appellate Tribunal (ITAT), Mumbai Bench.
---
### About the Case:
* It ruled that the exemption on daily allowances under **Section 10(14)** is limited to the **actual amount spent** or **amount of allowance paid**, whichever is less.
* The ITAT held that the Assessing Officer cannot demand detailed proof of expenditure unless the allowance is **unreasonable** or **disproportionate** to the employee’s salary and duties.
* If the daily allowance is reasonable and linked to official travel/duties, exemption can be claimed without furnishing bills.
---
### Citation and Access:
* The official citation:
**Madanlal Mohanlal Narang vs CIT (2007) 11 SOT 76 (Mumbai)**
* This case is usually available in ITAT decisions databases or legal research platforms like **Taxmann**, **SCC Online**, or **Indian Kanoon**.
* Unfortunately, there’s no official free government portal hosting ITAT decisions; however, you can try Indian Kanoon for a free text version:
[https://indiankanoon.org/](https://indiankanoon.org/) — search the case name or citation.
---
If you want, I can help summarize the case judgment or draft a brief note for your client based on it!
**Madanlal Mohanlal Narang vs CIT (2007) 11 SOT 76 (Mumbai)**
This is a decision from the Income Tax Appellate Tribunal (ITAT), Mumbai Bench.
---
### About the Case:
* It ruled that the exemption on daily allowances under **Section 10(14)** is limited to the **actual amount spent** or **amount of allowance paid**, whichever is less.
* The ITAT held that the Assessing Officer cannot demand detailed proof of expenditure unless the allowance is **unreasonable** or **disproportionate** to the employee’s salary and duties.
* If the daily allowance is reasonable and linked to official travel/duties, exemption can be claimed without furnishing bills.
---
### Citation and Access:
* The official citation:
**Madanlal Mohanlal Narang vs CIT (2007) 11 SOT 76 (Mumbai)**
* This case is usually available in ITAT decisions databases or legal research platforms like **Taxmann**, **SCC Online**, or **Indian Kanoon**.
* Unfortunately, there’s no official free government portal hosting ITAT decisions; however, you can try Indian Kanoon for a free text version:
[https://indiankanoon.org/](https://indiankanoon.org/) — search the case name or citation.
---
If you want, I can help summarize the case judgment or draft a brief note for your client based on it!
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Post Office RD Interest
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Eway bill for machinery reparing
- Gift of mutual fund units to daughter
- ITR 3 FILING OF AN INDIVIDUAL (PARTNER IN A PARTNERSHIP fIRM)
- Annual return of gst limit
- Reporting of STCG on Property in ITR
- Form 10BD Filling
- Not able to file ITR
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
