TaxTMI 
TaxTMI 
2001 (8) TMI 12
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....r appeal the Income-tax Appellate Tribunal upheld the order of the Commissioner of Income-tax (Appeals), in view of the decision of the Calcutta High Court in the case of CIT v. Britannia Industries Co. Ltd. [1982] 135 ITR 35. At the instance of the Revenue, the question that was referred to the High Court for its opinion was as follows : "Whether, on the facts and in the circumstances, and on a correct interpretation of section 40A(5) of the Income-tax Act, 1961 and rule 3(c) of the Income-tax Rules, 1962, the Appellate Tribunal was justified in law in holding that the value of the free car provided to the employees for the purpose of working out the disallowance in the case of the employer, i.e., the assessee-company should be the same as prescribed by rule 3(c) of the Income-tax Rules, 1962 in the case of the employee ?" The High Court by the impugned judgment and order answered the question in favour of the assessee, relying upon its earlier decision in the case of Geoffrey Manners and Co. Ltd. v. CIT [1996] 221 ITR 695 (Bom). The Revenue is in appeal before this court on grant of leave. The question for determination is, where the actual expenditure incurred by an employe....
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.... expenditure and allowance referred to in sub-clauses (i) and (ii) of this clause ; and (b) the expenditure and allowance referred to in sub-clauses (i) and (ii) of clause (c) of section 40, in respect of an employee or a former employee, being a director or a person who has a substantial interest in the company or a relative of the director or of such person, as is in excess of the sum of seventy two thousand rupees, shall in no case be allowed as a deduction : ... (c) The limits referred to in clause (a) are the followings namely (ii) in respect of the aggregate of the expenditure and the allowance referred to in sub-clause (ii) of clause (a), one-fifth of the amount of the salary payable to the employee or an amount calculated at the rate Of one thousand rupees for each month or part thereof comprised in the period of employment in India of the employee during the previous year, whichever is less ... Explanation 2.-In this sub-section,-... (b) 'perquisite' means (i) rent-free accommodation provided to the employee by the assessee ; (ii) any concession in the matter of rent respecting any accommodation provided to the employee by the assessee (iii) any benefit or....
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....ing of the car does not exceed 16 or the cubic capacity the engine does not exceed 1.88 litres Where the h.p. rating of the car exceeds 16 or the cubic capacity of the engine exceeds 1.88 litres Rs. Rs. 1. Where the motor car is owned or hired by the employer and all the expenses on maintenance and running are met or reimbursed to 300 400 2. Where the motor car is owned or hired by the employer but the expenses on maintenance and Funning for the assesses' privateor personal purposes are met by the assessee. 100 150 Provided that where a chauffeur is also provided to run the motor car, the value of the perquisite as calculated in accordance with this Table shall be increased by a sum of Rs. 150 per month : (iii) where one or more motor cars are owned or hired by the employer of the assessee and the assessee is allowed the use of such motor car, or all or any of such motor cars (otherwise than wholly and exclusively in the performance of his duties), an amount calculated ....
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....plying the same for valuing the perquisites for the purpose of computing the disallowance under section 40A(5) of the Act because the rule has been framed by the Central Board of Revenue with a view to get over the difficulties that might arise in determining the value of the perquisite in respect of the use of the car owned and maintained by the employer of the employees. As already noticed, the Bombay High Court followed the opinion expressed by the Calcutta High Court in the case of Britannia Industries Co. Ltd. [1982] 135 ITR 35. In CIT v. Rajesh Textile Mills Ltd. [1988] 173 ITR 179, the Gujarat High Court has analysed the legal position for coming to the conclusion that the computation of monetary benefit of perquisites in the hands of the employees has to be on an entirely different footing and concerns entirely a different topic and the bead of income as compared to the computation of expenses actually incurred by the employer-assessee from the point of view of their deductibility from the income of the employer under the bead "Profits and gains of business or profession". Dealing with the decision in the case of Britannia Industries Co. Ltd. [1982] 135 ITR 35 (Cal),....