Law:

Section:

Section 16(iv) [as it stood prior to 1-4-1972] of the Income-tax Act, 1961 - Salaries - Standard deduction - Assessee, a works manager, owned a motor car - Employer paid him a fixed allowance per month to meet travelling expenses for attending to several matters pertaining to his employment - Tribunal found that amount paid to assessee towards travelling expenses actually fell short of actual expenses incurred in travelling for purposes of employment - Whether amount received by assessee per month could be said to be a conveyance allowance - Held, no - Whether assessee was entitled to deduction of such sum under section 16(iv) - Held, yes Facts In the assessment year 1971-72, the assessee, a works manager of a company, maintained a car of his own. He was in receipt of a fixed allowance of Rs. 200 per month for meeting travelling expenses. During the course of his duties he was required to move from place to place for attending to several matters. The actual expenses incurred by him exceeded the amount paid to him. In the assessment year, the assessee claimed deduction of Rs. 2,400 under section 16(iv) which was rejected by the ITO as well as the AAC. On appeal, the Tribunal accepted the explanation of the assessee that the amount of Rs. 200 per month paid to him fell short of the actual expenses, which the assessee had to incur in travelling for the purposes of his employment, namely, for the actual work of his employer, apart from going to the place of work and returning from the place of work. It, therefore, held that the assessee was entitled to the deduction of Rs. 2,400 under section 16(iv). On reference: Held Under section 75(iv), the assessee was entitled to get the deduction if he owned a motor-car, which he used for the purposes of his employment, provided he was not in receipt of any conveyance allowance, whether as such or as part of his salary in respect of expenditure on travelling for the purposes of his employment. In the present case, in view of the Tribunal's finding the amount of Rs. 200 per month received by the assessee could not be said to be the conveyance allowance. Accordingly, the assessee was entitled to the deduction of Rs. 200 per…

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