Court Upholds Non-Taxability of Certain Allowances for Judges, Pending Final Decision
In a significant interim order, the Delhi High Court has provided temporary relief to judges of the High Court and Supreme Court concerning the taxation of specific allowances. The court has stayed the Central Board of Direct Taxes' (CBDT) recent memorandum that sought to include certain allowances within the taxable income of judges under the new tax regime introduced by Section 115BAC of the Income Tax Act, 1961/2025.
The Delhi Tax Bar Association, representing the petitioners, challenged the Office Memorandum dated September 12, 2025, which clarified the allowances payable to judges under the High Court Judges (Salaries and Conditions of Service) Act, 1954, and the Supreme Court Judges Act, 1958. The petitioner argued that these allowances should not be part of taxable income, as protected by Sections 22D and 23D of the respective Acts. The court, acknowledging the non-obstante clauses in these sections, noted that they provide an overriding effect over the Income Tax Act provisions, including the new Section 115BAC.
The court, presided by Justices Dinesh Mehta and Rajneesh Kumar Gupta, emphasized that the language of Sections 22D and 23D excludes these allowances from the computation of income under the head salaries, thereby not treating them as deductions or exemptions. This exclusion, the court noted, aligns with the constitutional provisions safeguarding the salaries and allowances of judges from being curtailed or varied to their detriment.
The court's interim direction allows judges to file their income tax returns under the new regime by categorizing these allowances as 'receipts not in the nature of income' within the exempt income category. This directive will stand until the court reaches a final decision on the matter.
The respondents, representing the Union of India and the CBDT, have been granted a two-week period to file their reply. The case is scheduled for further hearing on September 3, 2026.
Bottom line:-
Clarification on the allowances payable to High Court and Supreme Court Judges under Section 22D of the High Court Judges (Salaries and Conditions of Service) Act, 1954 and Section 23D of the Supreme Court Judges Act, 1958, amidst the provisions of Section 115BAC of the Income Tax Act, 1961/2025.
Statutory provision(s):
High Court Judges (Salaries and Conditions of Service) Act, 1954 - Section 22D, Supreme Court Judges Act, 1958 - Section 23D, Income Tax Act, 1961 - Section 115BAC
Delhi Tax Bar Association v. Union of India, (Delhi)(DB) : Law Finder Doc id # 2945273
