1984 (8) TMI 96 - AT - Income Tax

Summary

Issues:
1. Restriction of standard deduction under s. 16(i) of the IT Act, 1961 to Rs. 1,000.
2. Disallowance of Rs. 360 paid as medical allowance.

Analysis:
The judgment involves an appeal by an employee of the U.P. State Electricity Board against the IT Authorities' order restricting the standard deduction under s. 16(i) of the IT Act, 1961 to Rs. 1,000 and disallowing Rs. 360 paid as medical allowance. The IT Authorities added Rs. 360 as income of the assessee and estimated Rs. 2,000 as the assessee's expenditure on the car for official use out of the total local outdoor duty allowance received. The AAC confirmed the addition of medical allowance and the restriction of the standard deduction to Rs. 1,000. The assessee appealed, arguing that the local outdoor duty allowance was reimbursement of actual expenses incurred in performance of duties, not conveyance allowance. The circular by U.P.S.E.B. supported this claim, stating the allowance was for reimbursement of expenses exclusively on official local outdoor journeys. The AAC observed that the expenses were actually incurred and deleted the addition made from the local outdoor duty allowance. The Tribunal agreed, holding that the assessee was entitled to the deduction under s. 16(i) of the Act, as the allowance was for reimbursement, not conveyance. The appeal was allowed in part.

In conclusion, the Tribunal held that the local outdoor duty allowance was for reimbursement of actual expenses incurred in the performance of duties, not conveyance allowance. The assessee was entitled to the deduction under s. 16(i) of the IT Act, as the allowance was not subject to the restriction of Rs. 1,000. The appeal was allowed in part, overturning the restriction on standard deduction and disallowance of medical allowance.