The Delhi High Court has passed an interim order permitting judges of the Supreme Court and High Courts to file their income tax returns by disclosing judicial allowances prescribed under Section 22D of the High Court Judges (Salaries & Conditions of Service) Act, 1954 and 23D of the Supreme Court Judges (Salaries and Conditions of Service) Act, 1958— as “receipts not in the nature of income”.

For context, allowance payable under Section 22A, 22B and 22C of the Act of 1954 and Leave Travel Concession provided to Judges of High Court and Supreme Court are totally excluded from the computation of their income chargeable under the head salary under Section 15 of the Income Tax Act, 1961.

However, the Central Board of Direct Taxes issued an Office Memorandum on September 12, 2025, denying such exemptions while opting for the new regime under Section 115BAC(1A) of the Income Tax Act, 1961.

A division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta today prima facie observed that Section 115BAC of the Income Tax Act does not override the statutory protections contained in Sections 22D and 23D governing such allowances.

The Court was hearing a petition filed by the Delhi Tax Bar Association, which regularly advises the judges on taxation matters and were concerned about preserving judicial independence.

At the outset, the bench made a disclosure regarding its own tax filings. While Justice Gupta informed that he had already filed his return under the new tax regime without claiming exemption on the disputed allowances, Justice Mehta stated that he intended to file his return under the old regime so that the controversy would not influence the adjudication.

Senior Advocate Sachit Jolly, appearing for the Bar Association, contended that Sections 22D and 23D expressly exclude certain allowances—including rent-free official residence, conveyance facilities, sumptuary allowance and leave travel concession—from the computation of salary income.

It was argued that the CBDT memorandum effectively takes away vested rights guaranteed to judges and violates Articles 125 and 221 of the Constitution, which prohibit any variation in the salaries and allowances of Supreme Court and High Court judges to their detriment after appointment.

Jolly argued that Sections 22D and 23D do not merely grant deductions or exemptions but altogether exclude the specified allowances from the scope of taxable salary. He submitted that the newly introduced tax regime under Section 115BAC of the Income Tax Act, 1961, and Section 202 of the Income Tax Act, 2025, cannot override these provisions.

Counsel appearing for the Union of India sought two weeks to file a reply.

Recording its prima facie view, the bench observed:

“The non-obstante clause in Section 22D and 23D gives Section 22D/23D overriding effect over all the provisions of the Income-Tax Act, 1961, including Section 115BAC. That apart, the expression used in Section 22D drives the allowances even outside the computation of income under the head salaries—'an amount which is not even included in the income cannot be said to have been exempted or deducted' so as to fall foul of Section 115BAC of the Act of 1961.”

The Court held that the issue required consideration and, in the meantime, directed that judges of the Supreme Court and High Courts may file their income tax returns or revised returns by declaring the allowances covered under Sections 22D and 23D as “receipts not in the nature of income” under the “Exempt Income” section of the e-filing portal.

It clarified that such returns shall not be processed until further orders.

The matter is now listed for hearing on September 3.

It is to be noted that Justice Sandeep Jain 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.

The judge 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.

Appearance: Mr. Sachit Jolly, Sr. Advocate with Mrs. Mansha Anand, Mr. Sohum Dua, Mr. Abyudaya Shankar Bajpai, Ms. Saloni Ray, Mr. Ghunaim Siddiqui, Ms. Manvi and Mr. Ramanand Roy, Advocates for Petitioner; Mr. Shlok Chandra, SSC along with Ms. Naincy Jain and Ms. Madhavi Shukla, JSCs and Mr. Udit Dad, Advocate for R-2. Ms. Arti Bansal, CGSC along with Ms. Shruti Goel, Advocate for R-1.

Case Title: Delhi Tax Bar Association Through Its Secretary K G Bansal v. Union of India & Anr.

Case No.: W.P.(C) 9365/2026.

Click here to read order