2003 (2) TMI 34 - HC - Income Tax

Whether, on the facts and in the circumstances of the case, the value of benefit or amenity relating to expenses on car for the purpose of applying the provisions of section 40(c) of the Income-tax Act has to be restricted to the assessable value of such benefit or amenity as perquisite in the hands of the employee-director? - In view of the said authoritative pronouncement and bearing in mind the fact that the provisions of section 40(c) are substantially irk pari materia with the provisions of section 40A(5), the question referred is answered in the negative, i.e., in favour of the Revenue and against the assessee.

Summary

The High Court of Delhi ruled that for computing disallowance under section 40(c) of the Income-tax Act, the value of benefit or amenity relating to expenses on a car should not be restricted to the assessable value of such benefit in the hands of the employee-director. The court referred to a similar case and concluded that the value of the perquisite in the hands of the employee is not relevant for section 40(c). The decision favored the Revenue and the reference was disposed of with no costs.