Employer-paid tax on non-monetary perquisites is a non-deductible business expense under the income tax framework. Tax paid by an employer on an employee's non-monetary perquisite is treated as a non-deductible application of income rather than an expenditure incurred for earning business income. The stated framework distinguishes the earlier and later provisions: under the earlier rule, the employer-paid tax on non-monetary perquisites was not taxable in the employee's hands by virtue of section 10(10CC), while it was not deductible in the employer's computation under section 40(a)(v). Under the later rule under section 35(a)(ii), the same principle is stated as a disallowance of business deduction.