The interim protection came on a petition filed by the Delhi Tax Bar Association, which challenged the CBDT’s Office Memorandum dated September 12, 2025 (Photo: Twitter)
The Delhi High Court has stayed the operation of a Central Board of Direct Taxes (CBDT) clarification that denied income tax exemption on certain allowances to Supreme Court and High Court judges who opted for the new tax regime, holding that the matter warrants detailed examination.
The interim protection came on a petition filed by the Delhi Tax Bar Association, which challenged the CBDT’s Office Memorandum dated September 12, 2025.
The association contended that restricting the tax exemption to only judges under the old tax regime undermined statutory safeguards governing judicial service conditions and raised concerns relating to judicial independence.
The dispute centres on allowances that are excluded from taxable salary under Section 22D of the High Court Judges (Salaries and Conditions of Service) Act, 1954, and Section 23D of the Supreme Court Judges (Salaries and Conditions of Service) Act, 1958. These include rent-free accommodation, conveyance allowance, sumptuary allowance and leave travel concession.
The CBDT memorandum stated that these exemptions would continue only for judges who remain under the old tax regime. Judges opting for the new tax regime under Section 115BAC(1A) of the Income-tax Act, 1961, would have these allowances treated as part of their taxable income.
Senior Advocate Sachit Jolly, appearing for the association, argued that the CBDT clarification violates Articles 125 and 221 of the Constitution, which protect the salaries and allowances of Supreme Court and High Court judges from being varied to their disadvantage after appointment.
He also submitted that the new income tax return utility does not provide an option to reflect these statutory exclusions for assessees opting for the new regime.
Hearing the matter, a Division Bench comprising Justices Dinesh Mehta and Rajneesh Kumar Gupta observed that the statutory provisions governing judges’ service conditions appeared to prevail over the Income-tax Rules.
Pending a final decision, the Bench directed the Income Tax Department not to process the income tax returns filed by judges in accordance with the challenged arrangement until the next date of hearing.
Senior Standing Counsel Shlok Chandra, appearing for the Centre, sought two weeks to file a reply.
First Published: Jul 23 2026 | 8:05 PM IST
