2000 (4) TMI 163 - AT - Income Tax

Summary

Issues:
1. Disallowance of standard deduction under s. 16(i)
2. Addition of car and telephone perquisites
3. Levy of interest under s. 234B

Issue 1: Disallowance of standard deduction under s. 16(i)
The appeal challenged the disallowance of Rs. 12,000 as standard deduction under s. 16(i) for the assessment year 1990-91. The contention was that the deduction had been allowed in earlier years and was justified due to an existing employer-employee relationship. The CIT(A) had previously allowed the standard deduction for the appellant for the assessment year 1989-90. The ITAT noted the CIT(A)'s order for the assessment years 1986-87 to 1989-90, which confirmed the employer-employee relationship and allowed the deduction. Considering these facts and the consistency in allowing the deduction in earlier years, the ITAT directed the AO to allow the standard deduction to the assessee.

Issue 2: Addition of car and telephone perquisites
The dispute involved the addition of Rs. 9,400 for car and telephone perquisites. The assessee argued that the facilities were provided for business purposes only, and any unauthorized personal use would not amount to a perquisite. Citing relevant case laws, the assessee contended that unauthorized use does not create a vested right or obligation on the employer. The Departmental Representative argued that personal use was authorized, as evidenced by non-recovery of disallowed amounts. The ITAT held that for a facility to be considered a perquisite, it must be authorized for personal use by the employer. The non-recovery of disallowed amounts did not establish authorized personal use, and hence, the additions were deleted.

Issue 3: Levy of interest under s. 234B
The levy of interest under s. 234B was considered a consequential issue, and the ITAT directed the AO to take care of it while giving appeal effect.

In conclusion, the ITAT allowed the appeal of the assessee, directing the AO to allow the standard deduction and deleting the additions related to car and telephone perquisites based on the lack of evidence for authorized personal use.