9911796707
TMI Blog1998 (8) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... ides the remuneration of ₹ 7,500 per month and 1 per cent commission on net profit, the assessee was allowed certain perquisites as enumerated in paras (a), (b) and (c ) of the explanatory statement. We are concerned with part (c) which reads as under : "Part - C (i)Use of Company's Car with a driver for the company's business. (ii)Free telephone facilities at residence. It is clarified that provision of car for use of company's business and telephone at residence will not be considered as perquisite. Personal long distance calls on telephone and use of car for private purpose shall be billed by the company." The assessee was provided with a company owned car, but instead of providing a driver he was allowed to reim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the perquisite may be determined on the basis provided in the table below : Value of perquisite per calendar month. Where the h.p. rating of the car does not exceed 16 or the cubic capacity of the engine does not exceed 1.88 litres. Where the h.p. rating of the car exceeds 16 or the cubic capacity of the engine exceeds 1.88 litres. 1 2 3 1.Where the motor car is owned or hired by the employer and all the expenses on maintenance and running are met or reimbursed to the assessee by the employer. 600 800 1 2 3 2.Where the motor-car is owned or hired by the employer but the expenses on maintenance and running for the assessee's private or per-sonal purposes are met by the assessee. 200 300 provided that where a ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany is meeting the same, such reimbursement will constitute perquisite. This ground of appeal does not succeed." 3. We have heard the parties and considered their rival submissions. As per the terms of employment, the assessee was to be provided with a car and driver. The car is to be used both for the personal purpose as well as office use and to the extent it is used for office purposes there cannot arise a question of any perquisite to the assessee and that is why it is clarified in the Circular that to that extent the provision of a car shall not be considered as perquisite. In such a situation, as provided in rule 3(c)( ii), the value of car perquisite is to be taken at ₹ 300 per month and ₹ 150 per month for the dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's assessment when the car is provided by the employer as per the agreement. When the car is provided both for the purposes of office as well as personal, the salary reimbursement of the chauffeur has to be for both the purposes. The salary paid at the rate of ₹ 700 per month has to be bifurcated and the payment that could be related to office, cannot be added to the income of the assessee and the remaining portion of the salary alone could be attributed to the personal use. The Bombay High Court in the case of Geoffrey Manners & Co. Ltd. v. CIT [1996] 221 ITR 695/89 Taxman 287 held that when there is no clear-cut bifurcation between the use of car for personal and business purposes, the safer way is to take the value as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... method of ₹ 150 per month is to be taken in the light of the aforesaid Bombay High Court decision as perquisite for the provision of the chauffeur to the assessee. We direct accordingly. 4. The next dispute is with regard to the allowability of interest of ₹ 21,849 paid on loans taken to repay the earlier loans which were admittedly used for advancing loans, the income from which is assessable under the head 'Income from other sources'. The assessee's claim was disallowed by the Assessing Officer on the ground that the interest paid could not be directly co-related to the loans from which interest had been earned. The assessee's reliance on the Tribunal's order in the appeal for assessment year 1974-75 in ITA No. 355/Ahd./78-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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