Delhi High Court to Hear Challenge Against CBDT Stand on Judicial Allowances

The Delhi High Court is scheduled to hear on July 16, 2026, a petition concerning the tax treatment of statutory allowances provided to Supreme Court and High Court judges who opt for the new income-tax regime.

The petition has been filed by the Delhi Tax Bar Association (DTBA) against an office memorandum issued by the Central Board of Direct Taxes (CBDT) on September 12, 2025. The memorandum states that the tax benefit relating to specified judicial allowances is available only under the old tax regime.

The matter was listed before a Division Bench comprising Justices Dinesh Mehta and Rajneesh Kumar Gupta. The hearing was deferred after the president of the Delhi High Court Bar Association requested that arguments not be advanced during the lawyers’ strike. No interim order was passed.

Dispute Over Statutory Exclusion of Allowances

The proceedings relate to Section 22D of the High Court Judges Act, 1954, and Section 23D of the Supreme Court Judges Act, 1958.

Under these provisions, specified facilities and allowances provided to judges are not included while computing income chargeable under the head “Salaries.” These benefits include:

• Rent-free official accommodation
• Conveyance facilities
• Sumptuary allowance
• Leave travel concession

The petitioner has argued that these items constitute statutory exclusions from salary income rather than tax exemptions. Accordingly, the association maintains that their exclusion cannot be withdrawn merely because a judge has opted for the new income-tax regime.

CBDT Cites Possibility of Dual Tax Benefit

According to the petition, the issue arose after a High Court judge informed the CBDT on August 12, 2025, that the relevant TDS statement utility, Form 16 and online income-tax return forms did not provide an appropriate mechanism for claiming these statutory exclusions under the new regime.

The CBDT reportedly took the position that extending the benefit under the new regime—where concessional tax rates are already available—would provide judges with a dual tax advantage.

The DTBA has disputed this interpretation, asserting that the specified allowances do not enter the taxable salary computation in the first place. It has therefore contended that their treatment should remain unchanged irrespective of the tax regime selected.

Constitutional Provisions Raised

The petition also relies on Articles 125 and 221 of the Constitution of India, which govern the salaries and allowances of Supreme Court and High Court judges, respectively.

The association has claimed that the CBDT memorandum adversely affects statutory benefits available to judges and is inconsistent with the constitutional protection against varying their allowances to their disadvantage after appointment.

Relief Sought from the Court

The petition seeks the quashing of the CBDT office memorandum dated September 12, 2025. It also requests directions for suitable modifications to income-tax return forms, TDS utilities and related reporting mechanisms so that judges opting for the new regime can disclose the statutory exclusions.

As interim relief, the petitioner has sought an extension of the July 31, 2026 income-tax return filing deadline for Assessment Year 2026–27. During the proceedings, an interim reporting arrangement was also proposed under which the amounts could be disclosed as “receipts not in the nature of income” until the dispute is decided.

CA Sansaar

The Income Tax Department’s official e-filing communication currently identifies July 31, 2026 as the return-filing due date for the relevant category of taxpayers. Income Tax Department