1981 (7) TMI 115 - AT - Income Tax

Summary

Issues:
- Deduction under section 16(1) of the Income Tax Act for the assessment years 1975-76 to 1977-78.

Analysis:
The appeals before the Appellate Tribunal ITAT Hyderabad-A revolved around the deduction under section 16(1) of the Income Tax Act for the assessment years 1975-76 to 1977-78. The primary contention was regarding the allowance of Rs. 3,500 claimed by the assessee for expenses related to the maintenance, upkeep, and running of a motor-car attributed to personal use. The Income Tax Officer (ITO) initially rejected this claim, leading to an appeal by the assessee.

Upon appeal, the assessee argued that the expenses for the car were reimbursed under a scheme known as Scheme III, where the Officer was allowed reimbursement subject to certain conditions. The assessee claimed that the expenses allowed by the employer were for the discharge of duties and produced evidence to support this claim, including salary certificates and mileage statements submitted for reimbursement. The Appellate Assistant Commissioner (AAC) noted that the ITO had already accepted the amounts paid to the appellant by the employer as exempt under section 10(14).

The AAC further referred to a CBDT circular stating that an assessee should not be denied relief under section 16(1) if the allowance received is a reimbursement of actual expenses incurred. Therefore, the AAC directed the ITO to allow full deduction under section 16(1) for all the years under consideration based on the evidence provided by the assessee.

The Department, aggrieved by the AAC's decision, filed an appeal before the Tribunal, arguing that the motor car was used for both official and personal purposes by the employee. However, the Tribunal upheld the AAC's decision, emphasizing that the reimbursement received by the assessee was for expenses actually incurred in the performance of duties. The Tribunal also cited a previous decision to support its conclusion that the assessee was entitled to the full deduction under section 16(1).

Ultimately, the Tribunal dismissed the appeal, affirming the AAC's order to allow full deduction under section 16(1) for all assessment years under consideration based on the evidence presented by the assessee and the relevant legal provisions and precedents cited during the proceedings.