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TMI Blog1985 (10) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the question raises issues about the bonus and about the depreciation on a, flat. The issue of bonus is in regard to the assessment year 1971-72. Counsel are agreed that in view of the judgment of this court in CIT v. Indokem Private Ltd. [1981] 132 ITR 125, it must be held that the Tribunal was right in holding that bonus is not perquisite under section 40(a)(v) of the Income-tax Act, 1961. The question regarding the depreciation on a flat arises in connection with the assessment year 1970-71, the previous year whereof ended on December 31, 1969. The said flat was rented by the assessee and was given for use to its director, one Barker-Bennet. The rent in the sum of Rs. 6,876 was paid by the assessee in respect of the said flat and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entitled to depreciation allowance in respect of the said flat used by the said director to the extent therein provided. In his submission, the word "allowance" in section 40(a)(v) of the Income-tax Act, 1961, covered depreciation allowance under section 32 thereof. He referred also to rule 5 of the Income-tax Rules in this behalf. Mr. Jetly brought to our attention the judgment of a Full Bench of the Kerala High Court in CIT v. Forbes, Ewart and Figgis P. Ltd. [1982] 138 ITR 1. The Kerala High Court considered the ambit of section 40(a)(v) of the Income-tax Act, 1961, in the context of expenditure incurred upon cars used by the assessee's directors and upon the maintenance of buildings given to the directors for occupation free of rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicated that the word " allowance " therein was not to be taken to mean an allowance to which an assessee was entitled in respect of an asset used by its employee. We are not impressed by Mr. Munim's argument. Section 40 of the Income-tax Act, 1961, commences with the words " Notwithstanding anything to the contrary in sections 30 to 39 ". This takes in section 32 which deals with depreciation. Section 32 provides that in respect of depreciation of, inter alia, buildings owned by an assessee and used for the purposes of its business, a deduction on account of depreciation would " be allowed " in the manner therein provided. The deduction on account of depreciation is, therefore, an allowance. The words of section 40(a)(v) indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect thereof will also be brought within the purview of the limit over the deductible amount of expenditure in providing perquisites, benefits or amenities to employees". Mr. Munim laid stress on the fact that in the latter portion quoted above, assets provided to an employee free of charge were set out. The earlier portion of what is quoted above sets out the objective of the provisions of section 40(a)(v) of the Income-tax Act, 1961, which is to bring within the purview of the limit any expenditure or allowance admissible to the employer in respect of assets provided by him to the employee free of charge or on a concessional basis. The latter part of what is quoted merely furnishes an example. There is nothing in section 40(a)(v) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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