- (1.) A director of a company was also its employee. The total perks debited were valued at Rs. 9,600 during the accounting year relevant to the assessment year and salary of Rs. 18,000.
(2.) THE Income-tax Officer applied the provisions of Section 40a (5) (c) of the Income-tax Act, 1961 (for short "the Act"), and came to the conclusion that the allowance on account of perquisites was to be restricted to 20 per cent, of the salary and allowed Rs. 3,600 while disallowing the remaining Rs. 6,000.
(3.) ON appeal, the Commissioner of Income-tax (Appeals) did not agree with the Income-tax Officer and held that Section 40 (c) should apply and allowed the deduction of Rs. 9,600. The Income-tax Appellate Tribunal, Amritsar, agreed with the Commissioner of Income-tax.;