1987 (4) TMI 123 - AT - Income Tax

Summary

Issues:
- Entitlement to full standard deduction under section 16(i) for an individual appointed as Managing Director of a company.

Analysis:
1. The only issue in the appeals was whether the assessee is entitled to the full standard deduction under section 16(i). The assessee, as the Managing Director of a company, was provided with a car for official and private use based on Ministry instructions. The Income-tax Officer restricted the deduction to Rs. 1,000, citing the provision that limits deduction if a vehicle is provided for personal use. The Appellate Assistant Commissioner upheld this decision, stating that the vehicle was not used wholly and exclusively for duties, making the proviso to section 16 applicable.

2. On further appeal, the assessee argued that the car was sparingly used for personal purposes and referred to Tribunal decisions allowing full standard deduction despite conveyance provided. The Tribunal analyzed section 16(i) governing deductions from salaries, highlighting that if a vehicle is provided for non-duty purposes, the deduction is limited to Rs. 1,000. The Tribunal differentiated between expenditure incurred for duties, personal expenses, and travel between residence and work.

3. The Tribunal explained that the standard deduction aims to avoid complexities in proving actual expenses incurred by employees. The proviso limiting the deduction to Rs. 1,000 addresses situations where the employer provides a vehicle for commuting. In this case, the employer treated the journey between residence and office as duty run, making it ineligible for full standard deduction under section 16(i).

4. The Tribunal distinguished the case from previous decisions where full deduction was allowed based on the exclusive office use of the vehicle or negligible personal use due to official duties. In this instance, the rules regarding the Staff Car indicated that the journey between residence and office was considered duty run, leading to the application of the proviso and restricting the deduction to Rs. 1,000. Consequently, the appeals were dismissed.