1984 (3) TMI 181 - AT - Income Tax

Assessee granted separate standard deductions for multiple employments, relief allowed for assessment years

The Tribunal allowed the assessee's appeals for the assessment years 1977-78 and 1980-81 regarding the admissibility of standard deductions for expenses ... Standard deduction for expenses incidental to employment under s. 16 - separate standard deduction in respect of each employment - proviso limiting deduction where employer provides conveyance or motor car - aggregation of salary income and assessment under one headStandard deduction for expenses incidental to employment under s. 16 - separate standard deduction in respect of each employment - proviso limiting deduction where employer provides conveyance or motor car - Standard deduction under s. 16 is allowable separately in respect of salary from each employer subject to the maximum permissible limit for each employment; the proviso restricting deduction to Rs. 1,000 where the employer provides a car/conveyance applies only to the salary from that particular employer and not to salaries from other employers. - HELD THAT: - The Tribunal accepted that a person may have multiple employers and that although all salary income is aggregated and assessed under one head, s. 16 provides a standard deduction in respect of expenditure incidental to employment which is calculable in relation to each employment. The proviso which caps the deduction at Rs. 1,000 where conveyance allowance or motor car is provided by an employer operates only in respect of the standard deduction attributable to that employer's salary; there is no reason to extend that cap to standard deductions computed in respect of salaries from other employers. Earlier Benches of the Tribunal have held that separate standard deductions are allowable for each source of salary and that the maximum deduction may be claimed in respect of separate employments subject to the per-employment ceiling. The assessee in the present appeals confined his claims within the permissible limits and therefore is entitled to separate deductions as computed. [Paras 2]Assessee entitled to claim standard deduction separately for each employment; proviso capping deduction to Rs. 1,000 applies only to the salary from the employer who provided the motor car.Application of standard deduction to multiple employments - calculation of permissible deduction where aggregate does not exceed per-employment ceiling - For assessment year 1977-78 the assessee was entitled to a total standard deduction of Rs. 3,500 instead of Rs. 1,000 allowed by the ITO. - HELD THAT: - The assessee received salaries from Skyline Industries (Rs. 16,500) and Trafico & Croslite (Rs. 12,000) in 1977-78. Having held that standard deduction is claimable separately for each employment and that the proviso capping to Rs. 1,000 applies only to the employment where a car was provided, the Tribunal computed the allowable deduction and found the assessee entitled to the balance so that the total permitted standard deduction for that year is Rs. 3,500. The claim was within the statutory limits and less than 20% of the relevant salary components where applicable. [Paras 3]Allow standard deduction of Rs. 3,500 for asst. yr. 1977-78; grant relief of Rs. 2,500 over the amount allowed by the ITO.Application of standard deduction to multiple employments - calculation of permissible deduction where one employment subject to proviso limit - For assessment year 1980-81 the assessee was entitled to a total standard deduction of Rs. 3,400 instead of Rs. 1,000 allowed by the ITO. - HELD THAT: - In 1980-81 the assessee received Rs. 12,000 from Trafico & Croslite and Rs. 48,000 from the employer who provided a car. Applying the principle that the proviso limiting deduction to Rs. 1,000 applies only to the employment where the car was provided, the Tribunal allowed Rs. 1,000 for the latter and Rs. 2,400 in respect of the Trafico & Croslite salary, yielding a total standard deduction of Rs. 3,400 for the year. The computation accords with the separately-claimable per-employment deductions and remains within permissible statutory limits. [Paras 4]Allow standard deduction of Rs. 3,400 for asst. yr. 1980-81; grant relief of Rs. 2,400 over the amount allowed by the ITO.Final Conclusion: Both appeals are allowed; the assessee's standard deduction claims for asst. yrs. 1977-78 and 1980-81 are allowed as indicated and the ITO is directed to make necessary adjustments. Issues: Admissibility of standard deduction for expenses incidental to employment under section 16 of the IT Act.Analysis:1. The case involves two appeals by the same assessee for the assessment years 1977-78 and 1980-81, questioning the admissibility of standard deduction for expenses incidental to employment under section 16 of the IT Act. The primary contention was whether the assessee was entitled to separate standard deductions for each employment subject to the maximum limit of Rs. 3,500, or if the deduction should be limited due to the provision of a car for personal use by one of the employers common to both years.2. The Tribunal considered the interpretation of section 16, which provides for a standard deduction in respect of expenditure incidental to employment. It was noted that a person can be an employee of multiple employers and receive salary from various sources. The section allows for a maximum deduction of Rs. 3,500, with a proviso limiting the deduction to Rs. 1,000 if a conveyance allowance or a motor car is provided by the employer. The Tribunal relied on previous decisions to support the assessee's claim for separate standard deductions for each source of salary income, beyond the Rs. 3,500 limit but within the limit for each particular employment.3. For the assessment year 1977-78, the assessee had salary income from two employers, entitling him to a standard deduction of Rs. 3,500 instead of the Rs. 1,000 allowed by the Income Tax Officer (ITO). The Tribunal allowed the deduction, providing relief of Rs. 2,500 to the assessee.4. In the assessment year 1980-81, the assessee received salary from two employers, justifying a standard deduction of Rs. 3,400 instead of the Rs. 1,000 allowed by the ITO. The Tribunal granted the deduction, offering relief of Rs. 2,400 to the assessee.5. Consequently, both appeals were allowed by the Tribunal, directing the ITO to make necessary adjustments in accordance with the allowed deductions for each assessment year.