R. Balia, J.

1. Heard learned counsel for the applicant. This is an application under Section 256(2) of the Income Tax Act, 1961, requiring us to direct the Tribunal to submit a statement of case for referring the following questions of law said to be arising out of the Tribunals order dated September 23, 1997, in I. T. A. No. 4772/Ahd of 1996 for the assessment year 1995-96.

"1. Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in holding that the CMRE (conveyance maintenance reimbursement of expenditure) paid to the employee on the condition of ownership and possession of a vehicle amounts to conveyance allowance for official purposes fully exempt under Section 10(14) regardless of the fact that the exemption is allowed only to the extent that the expenses which are wholly, necessarily and exclusively incurred in the performance of duties of an office

2. Whether, on the facts and in the circumstances of the case, there was any material before the Tribunal to hold that the assessee had an impression that such allowance is exempt under Section 10(14) of the Income Tax Act, 1961, even though it is not fully utilised for official purposes "

2. The application under Section 256(1) has been rejected by holding that no question of law arises out of the aforesaid order.

3. The question that has been raised is in the following facts and circumstances. As per the findings of the Tribunal, the respondent-assessee has framed a scheme which has been known as "CMRE" with the approval of the Central Government. The word "CMRE" is the abbreviation of "conveyance maintenance reimbursement of expenditure. The scheme aims at promoting efficiency by encouraging the employees to own and maintain conveyance for using such conveyance for journeys undertaken by them for official work. Reimbursement is granted for one vehicle subject to the condition that the employee is in complete ownership and possession of the conveyance which is to be maintained in good running condition and which is actually used for official journeys. Further, the reimbursement of the expenditure actually incurred by the employees to maintain and run the conveyance for official use is not made automatically but is released only after the employee gives a certificate that the expenditure incurred on the maintenance and running of the vehicle during the relevant month is in excess of the amount claimed. This suggests that reimbursement of expenses incurred for use of vehicle for official purposes is not to an unlimited but to a fixed limit.

4. While deducting tax at source on salaries paid to the employees by ONGC, the amount disbursed under the scheme is not taken into account for the purpose of deducting tax at source on such sum. In other words, such disbursement at the time of deducting tax at source is not considered to be taxable in the hands of the employee. The Income Tax Officer has held that the amounts so disbursed to the employees are not fully exempt from tax under Section 10(14) because the employees have not actually incurred expenses to the extent of the amount allegedly reimbursed or paid to the employees every month to meet such expenses and to that extent there has been short deduction at source. For this penalty proceedings under Section 201(1A) and for interest chargeable on such short deduction under Section 221 were initiated. The Tribunal has also found that ultimately the amount to the extent it was not satisfactorily explained to have been actually incurred by an employee and was found to be taxable in the hands of the employees had been brought to tax and the tax has been recovered.

5. We are of the opinion that in the facts and circumstances found by the Tribunal no question of law referable to this court arises as the answer is evident. The tax at source in the case of an employee in receipt of salaries is deducted on the basis of estimate of income under the head "Salary" emanating from the employer. That estimate also includes a fair estimate by the employer whether any amount paid by him is not likely to be subjected to tax under any provisions of the Income Tax Act. As we have noticed above, the evidence regarding operation of the scheme clearly attracted the provisions of Section 10(14) inasmuch as reimbursement is granted for use of one vehicle owned and possessed by the employee for expenses incurred in undertaking official journeys and the payment is made on the employee issuing a certificate that he has incurred more expenses than the amount which is being reimbursed to him at the end of the month. The fact that reimbursement is up to a maximum limit and not more does not detract from the fact that expenses are being paid as far as the employer is concerned towards reimbursing actual expenses incurred by the employee in undertaking official journeys up to the extent the amount is actually reimbursed. Nor does the fact that the employee, during the course of his assessment, is not found entitled to full benefit under Section 10(14), in any way reflect on the estimate of Income Tax payable on the income of the employee at the time when such amount is paid. Whether an employee actually incurs such amount for official purposes is relevant for assessment of the employee because the exemption operates in his terms and conditions of availing of such exemption that is to be fulfilled by him. Whether the employee is able to substantiate his claim to exemption has no bearing on the estimate of income liable to tax to be made by the employer.

6. These findings do not give rise to any question of law. The fact that ultimately on the assessment of the employees they have been found in not utilising the full amount received by them from the employer does not reflect in any manner on the estimate of the employer at the end of each month about the income of the employee received from his employer liable to tax as per the mark it bears.

7. The application is rejected.