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Issues:
1. Interpretation of section 16(1) of the Income-tax Act, 1961 regarding standard deduction for motor car expenses. 2. Application of CBDT Circular No. 1144 dated 27-1-1978 in determining the eligibility for full standard deduction. 3. Whether reimbursement for official use of a car affects the entitlement to the full standard deduction. 4. Determining the eligibility for the full standard deduction based on the employer's contribution to car expenses. Analysis: The judgment by the Appellate Tribunal ITAT Hyderabad-A involved an appeal challenging the order of the Commissioner (Appeals) IT, Andhra Pradesh, which restricted the standard deduction for motor car expenses to Rs. 1,000 for the assessment year 1979-80. The issue revolved around the interpretation of section 16(1) of the Income-tax Act, specifically proviso (ii) to clause (i), which limits the deduction when a motor car is provided by the employer. The CBDT Circular No. 1144 dated 27-1-1978 was cited, emphasizing that full allowance is warranted when the taxpayer is only reimbursed for actual conveyance expenses for official purposes, regardless of personal use reimbursement. The Tribunal noted previous cases where full allowance was granted in similar scenarios. The Tribunal analyzed that the standard deduction should be restricted only when the employer bears the expenses of the car's use, not merely its availability. Referring to the CBDT letter to the Federation of Indian Chambers of Commerce and Industry, it was highlighted that reimbursement for official use should not disqualify the taxpayer from claiming the full allowance. The Tribunal emphasized that the taxpayer should not be disadvantaged for bearing all running expenses, as long as the employer does not cover personal use expenses. It was established that the taxpayer, by covering all expenses, excluded any possibility of the employer contributing to personal use costs, thereby entitling the taxpayer to the full standard deduction. Ultimately, the Tribunal allowed the appeal, granting the taxpayer the full standard deduction of Rs. 5,000 instead of the Rs. 1,000 allowed by the lower authorities. The decision was based on the taxpayer's exclusion of any employer contribution to personal use expenses, aligning with the principles outlined in the CBDT circular and previous Tribunal decisions.
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