Law: Income Tax Act, 1961

Section: 16(i)

Income-tax-Salary---Standard deduction---Vehicle provided by employer for official and personal use---Full standard deduction cannot be claimed---Indian Income Tax Act, 1961, S.16(i). For the assessment year 1977-78, the assessee was allowed the use of the car belonging to the company on condition that he paid a sum of Rs.100 for any use of the car for private purpose. The Income-tax Officer, on this admitted position, reduced the standard deduction under section 16(i), proviso clause (ii), of the Income Tax Act, 1961, on the ground that the assessee had not been provided with a vehicle wholly and exclusively for official purposes and the deduction was allowed only in a sum of Rs.1,000. The Tribunal, however, allowed the standard deduction of Rs.3,500 in full. On a reference: Held, that this was clearly a case where the vehicle was provided for personal as well as official use and not provided wholly and exclusively for official purpose. The assessee was, therefore, not entitled to the full standard deduction. CIT v. Adaikappa Chettiar (A.R.) (1973) 91 ITR 90 (Mad.) distinguished. CIT v. Gency (P.) (1986) 162 ITR 434 (Bom.) ref. THIS JUDGMENT DELIVERED BY: R. JAYASIMHA BABU, J.---As to whether an employee to whom a car is provided and the use of the same by such employee for personal use is also permitted, such an employee can claim the benefit of the standard deduction in respect of the assessment for the assessment year 1977-78, is the question that arises for consideration in this reference made by the Tribunal at the instance of the Revenue. The assessee was a whole time executive director of Brakes India Limited. He was allowed the use of the car belonging to the company on condition that he paid a sum of Rs.100 for any use of the car, for private purposes. The Income-tax Officer, on this admitted position, reduced the standard deduction under section 16(i), proviso clause (ii), on the ground that the assessee had not been provided with a vehicle wholly and exclusively for official purposes and the deduction was allowed only in a sum of Rs.1,000. The Appellate Assistant Commissioner agreed with the Income-tax Officer. The Tribunal, however, has allowed the…

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