1994 (11) TMI 174 - AT - Income Tax

Summary

Issues:
Calculation of standard deduction under section 16 of the IT Act for an employee director in two companies.

Analysis:
The main issue in this case is determining the correct standard deduction allowable to the assessee under section 16 of the IT Act. The assessee, an employee director in two companies, claimed a standard deduction of Rs. 12,000, while the Assessing Officer granted only Rs. 1,000 based on the presumption that the assessee used the company's car for personal purposes. The appellant argued that the cars were not required for personal use as one company's car was partly used for personal purposes, as evidenced by the depreciation chart. The Assessing Officer did not consider this evidence and assumed personal use of the company's car. The appellant contended that standard deduction should be allowed at Rs. 12,000 or at least Rs. 11,800.

The CIT(A) granted full deduction at Rs. 12,000 for the previous assessment year, and the current appeal was filed by the Revenue against this decision. During the appeal, the Departmental Representative failed to produce any resolution permitting the assessee to use the company's car for personal use. The counsel for the assessee argued that the motor car should be provided specifically by the employer for the deduction to apply. Additionally, one of the employers had no car in the relevant year, making it impossible for that company to provide a car to the assessee. Referring to a previous Tribunal decision, the counsel asserted that the assessee is entitled to full standard deduction under section 16(i) of the IT Act.

The Tribunal decision cited clarified that income from each employment should be separately calculated, and standard deduction is allowed for expenses incidental to employment. The Tribunal's decision in a similar case supported the assessee's entitlement to full standard deduction. The counsel also highlighted that for the previous assessment year, the CIT(A) had granted full standard deduction to the assessee, and this decision was final as no appeal was filed by the Revenue. After considering all arguments and evidence, the Tribunal concluded that the CIT(A)'s order was justified, and the appeal was dismissed.