1981 (9) TMI 138 - AT - Income Tax

Summary

Issues:
1. Valuation of car perquisite for an individual director receiving salary from companies.
2. Entitlement to standard deduction under section 16(i) of the Income-tax Act, 1961.

Analysis:
1. The Income Tax Officer (ITO) valued the car perquisite for the individual director at Rs. 5,400 as per rule 3(c)(vi) of the Income-tax Rules, 1962. The ITO also restricted the standard deduction to Rs. 1,000 under section 16(i) based on the perquisite value. The Commissioner (Appeals) upheld the ITO's decision, stating that the car was provided exclusively for personal use, justifying the valuation and deduction restriction.

2. The assessee contended that there was no agreement for exclusive personal use of the car, citing previous case law. The Tribunal considered the facts and legal definitions of "benefit" and "perquisite" from a company. It was established that unauthorized benefits taken without company approval do not constitute taxable perquisites. The Tribunal concluded that the assessee did not obtain a benefit or perquisite as defined in section 2(24)(iv), hence overturning the ITO's valuation and deduction restriction.

3. The Tribunal emphasized that benefits or perquisites must arise from an agreement or arrangement with the company to be taxable. Unauthorized benefits taken without company consent do not qualify as perquisites. The Tribunal ruled in favor of the assessee, allowing the appeal in full and canceling the previous decisions of the authorities.