No exemption under section 10(14) shall be granted in respect of uniform allowance paid to employees if there was no dress code and the employees were free to wear any dress.
a) Assessee paid uniform allowance to its employees. The allowance so paid was claimed as deduction under Section 10(14) and not included in the salary of the employees for the purpose of deduction of tax at source under Section 192;
b) The Assessing Officer disallowed the claim and included the allowance for purpose of deduction of tax at source;
c) CIT(A) affirmed the disallowance.
The Tribunal held in favour of revenue as under:
1) The following two conditions must be satisfied to avail exemption under Section 10(14):
a) the allowance should be given to meet expenses incurred for performance of official duties;
b) the expenditure must be actually incurred.
2) In the instant case, the assessee was unable to satisfy any of the conditions as there was no dress code for the employees and they were free to wear any dress;
3) Therefore, allowance could not be said to be granted to meet the expenses incurred for official purposes. Further, assessee was unable to establish that the expenditure was actually incurred;
4) Hence, uniform allowance paid to employees must be included in their salary for the purpose of deduction of tax at source under Section 192 - Facets Polishing Works (P.) Ltd. v. ITO  58 taxmann.com 373 (Ahmedabad - Trib.)