Conveyance reimbursement versus allowance: per-kilometre payments did not restrict the standard deduction under section 16(1).

Reimbursement of conveyance expenses at a per-kilometre rate was treated as reimbursement of actual official travel costs, not as a regular conveyance allowance. The distinction between a periodic allowance and reimbursement of expenses was applied, and the employee was found not to be in receipt of conveyance allowance within the proviso to section 16(1) of the Income-tax Act, 1961. As a result, the standard deduction under section 16(1) was not restricted and the assessee remained entitled to the full deduction. The reimbursement was also noted as having been treated as exempt under section 10.

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Issues: Whether reimbursement of conveyance expenses at a per-kilometre rate constituted conveyance allowance so as to restrict the standard deduction under section 16(1) of the Income-tax Act, 1961.

Analysis: The payment was found to be reimbursement only when the assessee used his car for official duties, and not a regular lump-sum conveyance allowance. The distinction between a periodic allowance and reimbursement of actual expenses was applied, and the facts showed that the assessee was not receiving conveyance allowance from the employer within the meaning of the proviso to section 16(1). The reimbursement had also been treated as exempt under section 10.

Conclusion: The assessee was not in receipt of conveyance allowance, and the standard deduction under section 16(1) could not be restricted to Rs. 1,000. The assessee was entitled to the full deduction, and the Revenue's appeals failed.

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