1995 (2) TMI 111 - AT - Income Tax

Summary

Issues:
Taxability of perquisite value in respect of a car and reduction in claim on account of standard deduction.

Analysis:
1. The appeals were filed against orders by the Deputy Commissioner of Income-tax (Appeals) regarding the taxability of the perquisite value of a car and reduction in standard deduction to Rs. 1,000. In one assessment year, an additional ground was raised for an addition of Rs. 30,274, which was later withdrawn by the appellant.

2. The Assessing Officer found that the assessee admitted to using the company's car for both official and personal purposes during a statement recorded under oath. As a result, a sum of Rs. 3,600 per year was added as the perquisite value of the car, and the standard deduction was reduced to Rs. 1,000 for each year under consideration.

3. The appellant contended that the company's resolution only authorized a consolidated salary without mentioning any perquisites related to the car usage. However, the Deputy Commissioner (Appeals) upheld the Assessing Officer's decision based on the statement recorded under section 132(5) by the assessee.

4. The appellant argued that the use of the company's car should not be considered unauthorized as it was not expressly prohibited by the company. The Departmental Representative supported the previous decisions, emphasizing the importance of the statement recorded under section 132(5) where the assessee admitted to using the car for private purposes.

5. The Tribunal examined the facts and previous judgments, including one from the Madras High Court, to determine the taxability of the perquisite value. The Tribunal noted that the resolution authorizing the salary did not mention perquisites but emphasized the admission by the assessee regarding car usage.

6. The Tribunal distinguished the Madras High Court judgment cited by the appellant, highlighting the different circumstances in that case. It concluded that the situation in the present case, where the Managing Director admitted to using the company's car for personal purposes, warranted upholding the decision of the Deputy Commissioner (Appeals) regarding taxability of the perquisite value and standard deduction reduction.

7. Ultimately, the Tribunal dismissed the appeals, affirming the orders passed by the Deputy Commissioner of Income-tax (Appeals) for all three years, upholding the taxability of the perquisite value of the car and the reduction in standard deduction to Rs. 1,000.