1983 (11) TMI 162 - AT - Income Tax

Summary

Issues:
- Delay in filing the appeal
- Entitlement to standard deduction above the ceiling limit of Rs. 3,500 under section 16(1) of the IT Act, 1961

Delay in filing the appeal:
The appeal by the assessee was delayed by 12 days, and the assessee explained that the delay was due to being out of India during the relevant period. The assessee requested condonation of the delay, which was granted by the tribunal on the grounds that there was a sufficient cause for the delay.

Entitlement to standard deduction above the ceiling limit:
The main issue in this appeal was whether the assessee, an individual employed by two companies simultaneously, was entitled to standard deduction above the ceiling limit of Rs. 3,500 under section 16(1) of the IT Act, 1961. The assessee had received a car as a perquisite from one company but not from the other. The Income Tax Officer (ITO) restricted the standard deduction to Rs. 1,000, rejecting the claim for standard deduction in respect of the salary from the company that did not provide a car. The Appellate Assistant Commissioner (AAC) upheld the ITO's decision, stating that only a single allowance under section 16(1) for the entire salary received was permissible.

Analysis:
During the hearing, the assessee's counsel argued that the computation of salary should be made separately for each employer, considering the terms and conditions of employment. The tribunal noted a previous judgment where prorata standard deduction was held permissible under section 16(1) of the IT Act when there was a change of employment within the previous year. The tribunal reasoned that the standard deduction is provided to meet employment-related expenses, subject to statutory limits and restrictions. In this case, since the assessee was employed by two companies with different benefits, it was fair to compute the income chargeable under "salaries" separately for each employment after making the standard deduction provided for. The tribunal disagreed with the AAC's view and held that prorata standard deduction should be granted for each employment, rather than restricting it to Rs. 1,000 as done by the ITO.

Therefore, the tribunal allowed the appeal, setting aside the lower authorities' decision on the standard deduction issue and directing the ITO to grant the standard deduction claimed by the assessee.