Delhi HC Puts Judges’ ITR Processing On Hold
The Delhi High Court has directed the Income Tax Department not to process income tax returns filed by judges of the Supreme Court and High Courts amid a dispute over the tax treatment of certain allowances under the new tax regime.
The court’s direction follows a petition filed by the Delhi Tax Bar Association challenging the position taken by the Central Board of Direct Taxes (CBDT) on the taxability of allowances provided to judges.
Dispute Centres On Four Major Allowances
The dispute concerns allowances and benefits including rent-free official accommodation, conveyance allowance, sumptuary allowance and leave travel concession.
The Delhi Tax Bar Association has argued that these benefits are excluded from judges’ taxable income under provisions of the High Court Judges Act, 1954, and the Supreme Court Judges Act, 1958.
The association has challenged the CBDT’s position that these exemptions cannot be claimed under the new tax regime.
CBDT Says New Regime Does Not Allow Exemptions
The CBDT had stated in September 2025 that the new tax regime does not provide for deductions and exemptions of the kind available under the old system.
According to the tax authorities’ position, allowances such as rent-free accommodation, conveyance allowance, sumptuary allowance and leave travel concession would therefore not be exempt under the new regime.
The dispute has now reached the Delhi High Court, which has said the provisions of the laws governing judges’ salaries and conditions of service require consideration.
Court Says Judges Can Declare Allowances Separately
The Delhi High Court has allowed judges who have opted for the new tax regime to file or revise their returns by showing the disputed allowance amounts under the category “receipts not in the nature of income”.
At the same time, the court has directed that the returns of judges identified in the proceedings should not be processed until further orders.
The court’s directions were issued in orders passed on July 22 and August 10.
Income Tax Department Raises Technical Problem
The Income Tax Department told the court that tax returns are processed electronically and its software cannot automatically identify which returns belong to sitting judges.
The department said there was a possibility that around 98% of returns could be processed without human intervention by the end of August, making it difficult to comply with a blanket order without identifying the judges concerned.
The court therefore directed the private secretaries of judges who had filed returns under the new regime to provide their relevant details, including PAN numbers, to the authorities.
Tax Demands And Refunds To Remain In Abeyance
The court has also directed that if any tax demand is generated after processing a judge’s return, it will remain in abeyance while the petition is pending.
Similarly, if a refund becomes payable, it will not be released during the pendency of the matter. Any amount already refunded will remain subject to the final outcome of the case.
The dispute therefore remains unresolved, with the court yet to give a final ruling on whether the allowances can be treated as exempt under the new tax regime.
Summary
The Delhi High Court has directed the Income Tax Department not to process identified income tax returns filed by Supreme Court and High Court judges amid a dispute over the tax treatment of certain allowances under the new regime. The case involves rent-free accommodation, conveyance allowance, sumptuary allowance and leave travel concession. Judges can declare the disputed amounts separately, while any tax demand or refund will remain in abeyance until the case is resolved.
