1983 (6) TMI 43 - AT - Income Tax

Summary

Issues Involved:
1. Entitlement to standard deduction under section 16(i) of the Income-tax Act, 1961.
2. Aggregation of salaries from multiple employments for the purpose of calculating standard deduction.
3. Application of proviso to section 16(i) when a car is provided by one employer.

Detailed Analysis:

1. Entitlement to Standard Deduction Under Section 16(i):

Judicial Member's View:
The Judicial Member held that the assessee is entitled to a deduction of Rs. 1,000 only, as the employment should be taken as a whole. The deduction under section 16(i) is subject to the proviso, which limits the deduction to Rs. 1,000 when a car is provided for personal use. Since the car was provided by Anil Starch Products Ltd. for both personal and official use, the proviso applies, limiting the deduction to Rs. 1,000.

Accountant Member's View:
The Accountant Member disagreed, stating that each employment should be considered separately for deductions. He argued that section 16 should be read as referring to each single employment, not all employments collectively. Thus, the assessee should be entitled to a full standard deduction of Rs. 3,500 for the employment with Saraspur Mills, where no car was provided.

Third Member's View:
The Third Member agreed with the Accountant Member, emphasizing that the income from each employment should be calculated separately. The deduction of Rs. 3,500 should be allowed for the employment with Saraspur Mills, as the proviso to section 16(i) does not apply to this employment. The Third Member also noted that there is no statutory provision to reduce the deduction allowable for one employment based on the conditions of another employment.

2. Aggregation of Salaries from Multiple Employments:

Judicial Member's View:
The Judicial Member held that the salaries from all employments should be aggregated for the purpose of calculating the standard deduction under section 16(i). He emphasized that the term 'employment' should be considered as a whole, and the deduction should apply to the entire income from salaries.

Accountant Member's View:
The Accountant Member argued that the income from each source of employment should be considered separately for deductions. He cited judicial precedents supporting the view that each source of income under the same head should be computed independently. He also noted that section 16 does not expressly require aggregation of salaries from different employments for the purpose of deductions.

Third Member's View:
The Third Member supported the Accountant Member's view, stating that the general principle of computing income from each source independently should apply. He emphasized that there is no statutory basis for aggregating salaries from multiple employments before applying the deductions under section 16.

3. Application of Proviso to Section 16(i) When a Car is Provided by One Employer:

Judicial Member's View:
The Judicial Member applied the proviso to section 16(i), which limits the deduction to Rs. 1,000 when a car is provided for personal use by the employer. He concluded that since Anil Starch Products Ltd. provided a car for personal use, the deduction should be limited to Rs. 1,000.

Accountant Member's View:
The Accountant Member argued that the proviso should only apply to the employment where the car was provided. For the employment with Saraspur Mills, where no car was provided, the full deduction of Rs. 3,500 should be allowed. He emphasized that the conditions of one employment should not affect the deductions for another employment.

Third Member's View:
The Third Member agreed with the Accountant Member, stating that the proviso to section 16(i) should not reduce the deduction available for an employment where no car was provided. He concluded that the assessee is entitled to a deduction of Rs. 3,500 for the employment with Saraspur Mills, as the proviso does not apply to this employment.

Conclusion:
The Third Member's decision aligned with the Accountant Member's view, resulting in the assessee being entitled to a deduction of Rs. 3,500 for the employment with Saraspur Mills. The appeal by the revenue was dismissed, and the order of the Commissioner (Appeals) was upheld to the extent that the assessee is entitled to a deduction of Rs. 3,500.