Law: Income Tax Act, 1961

Section: 40(c)

(a) Income-tax----Business expenditure ---Company---Ceiling on expenditure---Assets used by director for personal purposes---Burden of proving that assets- were not used for personal purposes of directors is on company---No proof that motor car was not used for personal purposes of director---Maintenance expenses and depreciation allowance' on motor cars to be taken into account for purposes of computing ceiling under S.40(c)---Indian Income Tax Act, 1961, S.40(c). That the Tribunal had recorded a finding that the cars had been used at least partly for the personal purposes of the directors. The assessee had not placed any material before the Tribunal to show that the cars were not even partly used for personal purposes. The Tribunal had come to the correct conclusion in holding that the motor cars were used if not wholly, at least partly, for the personal purposes of the directors and maintenance expenditure of the cars should be taken into account for the purpose of disallowance under section 40(c) of the Act. That the depreciation allowed to the assessee on cars maintained by it and which had been used, if not wholly, at least partly, for the personal purposes of the directors, could be taken into consideration for purposes of disallowance in excess of the prescribed limit of Rs.72,000. C.W.S. (India) Ltd. v. CIT (1994) 208 ITR 649 (SC) fol. (b) Income-tax--- ----Business expenditure---Company---Ceiling on expenditure---Benefit or amenity to director---Reimbursement of medical expenses constitutes benefit or amenity to director---Amount given as reimbursement to be taken into account for computing ceiling under S.40(c)---Indian Income Tax Act, 1961, S.40(c). That the medical expenses reimbursed would constitute the benefit or amenity to the director and should be taken into account for computing the ceiling limit of Rs.72,000 under section 40(c). Rane (Madras) Ltd. v. CIT (1995) 212 ITR 583 (Mad.) fol. Alembic Glass Industries Ltd. v. CIT (1994) 205 ITR 200 (Guj.); CIT v. Commonwealth Trust Ltd. (1982) 135 ITR 19 (Ker.); CIT v. Indian Engineering and Commercial Corporation (P.) Ltd. (1993) 201 ITR 723 (SC); CIT v. Kisenchand Chellaram (India) (P.) Ltd.…

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