Delhi High Court Stays CBDT Memorandum on Tax Treatment of Allowances Paid to Supreme Court and High Court Judges

Court : Delhi High Court

Brief :

The Delhi Tax Bar Association challenged a CBDT Office Memorandum concerning the tax treatment of specified allowances paid to judges of the Supreme Court and High Courts under the new income-tax regime prescribed by Section 115BAC of the Income-tax Act, 1961.

The petitioner argued that allowances covered by Section 22D of the High Court Judges (Salaries and Conditions of Service) Act, 1954, and Section 23D of the Supreme Court Judges (Salaries and Conditions of Service) Act, 1958, are statutorily excluded from salary income. Therefore, such receipts cannot be treated merely as deductions or exemptions restricted under Section 115BAC.

These benefits include allowances provided under Sections 22A, 22B and 22C of the 1954 Act, along with eligible Leave Travel Concession benefits. According to the petitioner, Sections 22D and 23D operate independently and contain overriding provisions that prevail over the Income-tax Act.

Citation :

Case: Delhi Tax Bar Association v. Union of India
Neutral Citation: 2026:DHC:5845-DB
Bench: Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta
Next Hearing: September 3, 2026

Judgement :

The Delhi High Court temporarily stayed the operation of the impugned CBDT Office Memorandum. The Court observed, prima facie, that Sections 22D and 23D contain overriding clauses that may prevail over the provisions of the Income-tax Act, including Section 115BAC.

The Bench further observed that an amount statutorily excluded from the computation of salary income cannot automatically be regarded as an exemption or deduction prohibited under the new tax regime.

As an interim arrangement, the Court permitted Supreme Court and High Court judges to file original or revised income-tax returns by reporting the specified allowances under the “Exempt Income” section. The amounts may be disclosed by selecting “Other Income” and the subcategory “Receipts Not in the Nature of Income.”

The Court directed that income-tax returns filed in accordance with this arrangement must neither be processed nor acted upon until further orders. The matter is listed for further hearing on September 3, 2026. CA Sansaar