1980 (2) TMI 119 - AT - Income Tax

Summary

Issues:
1. Allowability of standard deduction under s. 16(i) for an individual and HUF.
2. Calculation of standard deduction for employment under different employers.
3. Interpretation of Proviso (ii) to s. 16(i) regarding the provision of a motor vehicle by the employer.

Detailed Analysis:
The judgment dealt with three appeals concerning the allowability of standard deduction under s. 16(i) for an individual assessed both individually and as Karta of a Hindu Undivided Family (HUF). The assessee, employed at two places, claimed a standard deduction of Rs. 3,500 under s. 16(i) for expenditure incidental to employment. The Income Tax Officer (ITO) allowed a reduced deduction based on the provision of a car for personal use by one employer. The Appellate Assistant Commissioner (AAC) allowed a higher deduction for the employment without a car, leading to appeals by both the Department and the assessee (ITA Nos. 2635, 2636, and 2651).

The main contention revolved around the interpretation of Proviso (ii) to s. 16(i) concerning the provision of a motor vehicle by the employer. The AAC held that the assessee could claim a deduction under s. 16(i)(a) for the employment without a car, exceeding the deduction allowed by the ITO under Proviso (ii) to s. 16(i). The Department sought restoration of the ITO's order, while the assessee challenged the incomplete relief granted by the AAC.

During arguments, the assessee's counsel contended that the AAC erred in including the value of the car in the salary income while restricting the statutory deduction. It was argued that the assessee was entitled to the full standard deduction of Rs. 3,500. Conversely, the Department's representative supported the ITO's decision based on the strict reading of Proviso (ii) to s. 16(i) regarding the provision of the car by one employer.

The Tribunal analyzed the language of s. 16(i) and the application of Proviso (ii) to determine the correct standard deduction. It was observed that the salary to be considered for deduction was the aggregate salary from both employers, and there was no basis for splitting the salary to calculate deductions separately. The Tribunal concluded that the assessee was entitled to the full standard deduction of Rs. 3,500 under s. 16(i) as the proviso regarding the motor vehicle provision was not applicable in this case.

In the final decision, the Tribunal dismissed the Department's appeals (ITA Nos. 2635 & 2636) and allowed the assessee's appeal (ITA No. 2651), affirming the entitlement to the full standard deduction under s. 16(i) for the assessee.