Sitting Judge Of Allahabad High Court Challenges Denial Of Tax Exemption On Statutory Allowances Under New Regime; CBDT Asked To Respond

A sitting Judge of the Allahabad High Court has challenged denial of tax exemption on statutory allowances as prescribed under Section 22D of the High Court Judges (Salaries & Conditions of Service) Act, 1954, under the new income tax regime.

Section 22D of the High Court Judges (Salaries and Conditions of Service) Act, 1954, the sumptuary allowance (Section 22C) and the house rent allowance (22A) granted to a High Court Judge is fully exempted from the purview of the Income Tax Act, 1961, and not liable to be included in the computation of his income chargeable under the head “Salaries” within Section 15 of the Act of 1961.

Justice Sandeep Jain has challenged the denial of exemption on grounds that CBDT's Office Memorandum dated 12.09.2025, which denies the statutory benefit of perquisites/exemptions accorded under Section 22D of the Act of 1954 while opting for the new regime under Section 115BAC(1A) of the Income Tax Act, 1961, is arbitrary, unjust and unlawful.

The office memorandum also states that the exemptions shall be available only under the old tax regime and that the new regime under Section 115 BAC(1A) provides liberal slabs, lower tax rates, and higher rebates, therefore providing further exemptions on perquisites would tantamount to providing double benefits.

It has been pleaded that the Act of 1954 is a Special Act enacted by the Parliament, and Section 22D of the said Act grants certain statutory benefits in income tax to the Judges of the High Courts, which can only be denied to the Judges by making suitable amendment in the said Act of 1954.

It has been further pleaded that till the above provision remains on the statute book, the exemptions as provided in Section 22D of the Act cannot be denied to High Courts Judges, irrespective of whether the ITR is filed by an assessee under the old tax regime or the new tax regime, since both are governed under the purview of Income Tax Act, 1961 itself.

When the matter was taken up, the division bench of Justice Saumitra Dayal Singh and Justice Swarupama Chaturvedi first asked the government pleader whether there was any objection to the bench hearing the case. As no objection was raised, the Court proceeded to call for instructions from the Central Board of Direct Taxes.

The bench also observed that the matter could not be heard ex parte without calling for instructions.

The matter has now been directed to be listed afresh on July 28, 2026.

Shri Nipun Singh, senior advocate assisted by Shri Naman Agrawal, advocate are appearing for the petitioner.