Employer-provided car use beyond official duties capped deduction and treated as taxable perquisite under income tax law.

Section 16 of the Income-tax Act, 1961, as applicable to the relevant assessment year, capped standard deduction at Rs. 1,000 where an employer-provided motor car was used otherwise than wholly and exclusively in the performance of duties, so the higher deduction claimed was unavailable. The employer-provided chauffeur-driven car, used partly for official and partly for non-official purposes, also fell within the statutory concept of a taxable perquisite under section 17. Both questions were answered in favour of the Revenue, and the Tribunal's view was upheld.

---

---

Issues: (i) Whether, for the relevant assessment year, the assessee was entitled to standard deduction beyond the ceiling of Rs. 1,000 where a motor car was provided by the employer for use otherwise than wholly and exclusively in the performance of duties; (ii) whether the provision of a chauffeur-driven car for partly official and partly non-official use constituted a perquisite under the Act.

Issue (i): Whether, for the relevant assessment year, the assessee was entitled to standard deduction beyond the ceiling of Rs. 1,000 where a motor car was provided by the employer for use otherwise than wholly and exclusively in the performance of duties.

Analysis: The proviso to clause (i) of section 16 of the Income-tax Act, 1961, as applicable to the relevant assessment year, specifically restricted the deduction to Rs. 1,000 where a motor car, motor cycle, scooter or other moped was provided by the employer for use otherwise than wholly and exclusively in the performance of duties. On the plain language of the provision, the higher deduction claimed by the assessee was not available.

Conclusion: The assessee was not entitled to deduction beyond Rs. 1,000 and the answer is against the assessee and in favour of the Revenue.

Issue (ii): Whether the provision of a chauffeur-driven car for partly official and partly non-official use constituted a perquisite under the Act.

Analysis: The use of the employer-provided car by the assessee, not being wholly and exclusively in the performance of duties, fell within the statutory concept addressed in section 17 of the Income-tax Act, 1961, and the addition sustained on that basis was consistent with the provision.

Conclusion: The provision of the car amounted to a perquisite and the answer is against the assessee and in favour of the Revenue.

Final Conclusion: Both referred questions were answered in favour of the Revenue, the Tribunal's view was upheld, and the reference was disposed of accordingly.

Ratio Decidendi: Where the statute fixes a monetary ceiling for deduction in respect of employer-provided motor vehicles used otherwise than wholly and exclusively for duties, the deduction cannot exceed that ceiling, and such employer-provided use may constitute a taxable perquisite.

---