B F DITTIA Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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S. Rajaratnam, Accountant Member -
(1.) THIS is an appeal filed by Shri B.F. Dittia of Hyderabad objecting to the order of the Commissioner (Appeals) II, Andhra Pradesh, restricting the standard deduction to Rs. 1,000 in the assessment for the assessment year 1979 80.
(2.) The assessee is an individual having income from salary. The assessee was provided with a motor car, but he was to meet the running expenses. According to the ITO, the assessee was not entitled to the full allowance of Rs. 5,000 since proviso (ii) to Clause (i) of Section 16 of the Income-tax Act, 1961 ('the Act') restricted the allowance to Rs. 1,000, where any 'motor car is provided to the assessee by his employer, for use by the assessee'. The first appellate authority confirmed this. The CBDT in Circular No. 1144 dated 27-11978 directed full allowance, where the assessee is reimbursed only the actual conveyance expenses for official purposes. In other words, even where the taxpayer gets reimbursement of expenses for official use, the assessee would be entitled to the full allowance. In view of the circular, this Tribunal has been taking the view in a number of cases that where the taxpayer does not have reimbursement for personal use from his employer, he will be entitled to the full allowance of Rs. 5.000. The learned representative for the assessee relied upon the order of the Tribunal Bench 'A' in the case of ITO v. S.S. Siddhanthi [IT Appeal Nos. 1233 to 1235 (Hyd.) of 198O dated 20-7-1981] to which one of us (Judicial Member) was a party. But in this case, the car was owned by the employee and the facts are not on all fours with the facts of the assessee's case. In another order of the Tribunal Bench 'B' in IT Appeal No. 991 (Hyd.) of 1980 dated 20-5-1981 relied upon by the learned departmental representative, there was no reference to CBDT's circular and hence this could not also form a precedent in favour of the revenue. In Bench 'A' order in IT Appeal No. 1635 (Hyd.) of 1979 dated 18-3-1980 the employer collected Rs. 75 from the employee for possible personal use of the car provided by him. The employer bore the running expenses also. Because the taxpayer (employee) reimburses Rs. 75 to the employer, it was inferred that the assessee did not have the car provided by the employer within the meaning of second proviso to Section 16(1). The assessee's representative argued that the assessee's case is in much better position, because the assessee bore the entire running expenses including those expenses relating to official use which he must have also necessarily made in the course of his employment. According to him, the mere availability of the car without the supply of fuel, maintenance expenses, etc., would not amount to a provision of the car especially in the light of the circular which' does not warrant such a strict view, as adopted by the authorities. The learned departmental representative, on the other hand, did claim that the circular does not authorise the full allowance in the facts of the assessee's case. He also pointed out that this claim being one of deduction it is for the assessee to satisfy his eligibility to the same.
We have carefully considered the records as well as the arguments. As pointed out, on behalf of the revenue, the standard deduction has to be restricted when the car is provided by the employer to the employee. What is contemplated is not merely the act of the car being made available. Only where the use of the car is at the employer's expense, the standard deduction is sought to be restricted by the statute. At any rate, in the letter dated 4-7-1981 from the CBDT to the Federation of Indian Chambers of Commerce and Industry, states that where the assessee gets a reimbursement for official use of the car, such reimbursement would not disqualify the claim for the full allowance. In the facts of the assessee's case the position is not different. If the assessee had got part of the running expenses as reimbursement for official use of the car after meeting the expenses himself, the assessee would have been entitled to the full standard deduction of Rs. 5,000 per annum. The assessee cannot be in a worse position because he chose to bear the full running expenses. In other words, the intention is that a taxpayer should not be denied the full standard deduction in cases, for example, where the taxpayer himself bears the expenses for attending office from his residence and back to the residence and where he uses it for official purposes. As long as the employer does not bear the expenses of personal use by the employee, the full allowance is admissible. In the facts of the assessee's case, the assessee by bearing the entire expenses has clearly excluded the possibility of employer meeting any part of the expenses for personal use. Under the circumstances, we are of the view that the assessee is entitled to succeed.
(3.) IN the result, the appeal is allowed. The assessee would be entitled to the standard deduction of Rs. 5,000 as against Rs. 1,000 allowed by the authorities below.;
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