Law: Income Tax Act, 1961

Section: 40A(5)

(a) Income-tax------Business, expenditure---Perquisites---Expenditure on provision of car provided to employees for their personal use---Is includible in the value of perquisites---Value of all perquisites including car not to exceed one-fifth of salary paid to employee---Medical reimbursement not includible in value of perquisites---Indian Income Tax Act, 1961, S.40 A(5). Expenditure on the provision of a car to an employee is includible in the value of perquisites for the purposes of section 40A(5) of the Income Tax Act, 1961. The value of all perquisites including the facility of car provided to an employee is not to exceed 1 /5th of the salary paid to him as laid down in section 40A(5) of the Act. The aggregate value of all perquisites is liable to be disallowed to the extent it exceeds the amount equivalent to 1/5th of the salary. The amount of medical reimbursement is, however, not includible in the perquisites. (b) Income Tax-- ---Depreciation---Depreciation neither sought nor claimed by assessee--¬Assessing Officer not required to allow depreciation---Indian Income Tax Act, 1961, S.32 Where depreciation is neither sought for nor claimed by .the assessee, the Assessing Officer is not required to allow depreciation under section 32 of the Income Tax Act, 1961. BECO Engineering Co. Ltd. v. CIT (1984) 148 ITR 478 (P&H) and CIT v. Friends Corporation (1989) 180 ITR 334 (P&H) fol. (c) Income Tax-- ----Capital or revenue expenditure---Loan raised in foreign currency for purchase of machinery from abroad---Loss occurring in repayment of loan due to payment of extra amount towards cost of machine due to fluctuation in exchange rate---Is capital expenditure. The loss occurring in the repayment of loan raised in foreign currency for purchase of machinery from abroad, due to payment of extra amount towards the cost of the machine due to fluctuation in the exchange rate, is capital expenditure. CIT v. Motor Industries Co. Ltd. (1988) 173 ITR 374 (Kar.); CIT v. South India Viscose Ltd. (1979) 120 ITR 451 (Mad.); CIT v. Elgi Rubber Products Ltd. (1996) 219 ITR 109 (Mad.); CIT v. Rohit Mills Ltd. (1996) 219 ITR 228 (Guj.) and Hindustan Machine Tools Ltd. (No.3)…

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