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Commissioner of Income-tax Vs. P. Gency - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 250 of 1975
Judge
Reported in(1986)54CTR(Bom)386; [1986]162ITR434(Bom)
ActsIncome Tax Act, 1961 - Sections 10(14) and 16
AppellantCommissioner of Income-tax
RespondentP. Gency
Excerpt:
direct taxation - deduction - sections 10 (14) and 16 of income tax act, 1961 - whether assessee entitled to deduct rs. 2400 under section 16 (iv) for relevant assessment year - assessee entitled to get deduction of rs. 200 if he owned motor car used for purpose of his employment provided he does not get conveyance allowance under section 16 (iv) - rs. 200 actually paid to assessee fell short of actual expenses which had been incurred in traveling for purposes of employment - said amount of rs. 200 cannot be said to be conveyance allowance - assessee entitled to deduction of rs. 200. - - the income-tax officer as well as the appellate assistant commissioner rejected this claim......he was entitled to get a deduction of rs. 200 per month, if he owned a motor car, which he used for the purpose of his employment, provided he was not in receipt of any conveyance allowance, whether as such or as part of his salary in respect of expenditure on traveling for the purpose of his employment. in the present case, mr. dhanuka does not dispute that the tribunal has accepted the explanation of the assessee that the amount of rs. 200 paid to him per month actually fell short of the actual expenses which the assessee had to incur in traveling for the purposes of his employment, namely, for the actual work of his employer, apart from going to the place of work. in these circumstances, it would appear that the amount of rs. 200 per month received by him cannot be said to be a.....
Judgment:

Kania, J.

1. This is a reference under section 256(1) of the Income-tax Act, 1961, made at the instance of the Commissioner of Income-tax. The question referred to us is as follows :

'Whether, on the facts and in the circumstances of the case, the assessee was entitled to deduct Rs. 2,400 under section 16(iv) of the Income-tax Act, 1961 ?'

2. The relevant facts are as follows. The year with which we are concerned in the assessment year 1971-72. The assessee was the Works Manager of the West End Watch Company since 1951. During the course of his duties, he was required to move from place to place for attending to several matters such as selection and purchase of materials, attending to customs clearance and so on. His employer paid him Rs. 200 per month to meet his outdoor traveling allowance. According to the assessee, this was a fixed allowance for meeting traveling expenses in order to save the botheration of his submitting vouchers for actual conveyance expenses incurred by him at the end of every day and avoiding several entries having to be made in the books. The assessee further stated that the actual expenses incurred by him for the said purposes always exceeded the amount paid to him. Right from the first year in which this allowance was paid to the assessee up to the year 1961-62, the Income-tax Officer concerned took the view that it was exempt under section 4(3)(vi) of the Indian Income-tax Act, 1922, and in respect of the assessment years from 1962-63 up to the assessment year in question, a similar deduction was given under section 10(14) of the Income-tax Act, 1961. The assessee maintained a car of his own during the relevant previous year and claimed deduction of Rs. 2,400 under section 16(iv) of the Income-tax Act, 1961, in the year of assessment. The Income-tax Officer as well as the Appellate Assistant Commissioner rejected this claim. On appeal to the Income-tax Appellate Tribunal, the Tribunal took the view that the assessee was entitled to claim this deduction. On a plain reading of the statement of the case, it is clear that the Tribunal has accepted the explanation of the assessee that the amount of Rs. 200 per month paid to him by way of allowance fell short of the actual traveling expenses incurred by him in attending to the work of his employer.

3. In our view, the question referred poses hardly any difficult. Section 16 of the Income-tax Act, 1961, provides for deductions from salary. Under the provisions of clause(iv) of that section, as it stood at the relevant time, and having regard to the salary of the assessee, it is common ground that he was entitled to get a deduction of Rs. 200 per month, if he owned a motor car, which he used for the purpose of his employment, provided he was not in receipt of any conveyance allowance, whether as such or as part of his salary in respect of expenditure on traveling for the purpose of his employment. In the present case, Mr. Dhanuka does not dispute that the Tribunal has accepted the explanation of the assessee that the amount of Rs. 200 paid to him per month actually fell short of the actual expenses which the assessee had to incur in traveling for the purposes of his employment, namely, for the actual work of his employer, apart from going to the place of work. In these circumstances, it would appear that the amount of Rs. 200 per month received by him cannot be said to be a conveyance allowance at all and he is entitled to the deduction of Rs. 200 per month claimed by him. Mr. Dhanuka has not seriously controverted this position.

4. In the result, the question referred to us is answered in the affirmative and in favour of the assessee. There will be no order as to costs.


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