TMI Blog1997 (8) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ount taxed in the hands of the employees on account of the perquisite should be considered instead of the amount of actual expenditure incurred by the assessee for providing car to the employees?" (ii) At the instance of the assessee : "1. Whether the Tribunal was right in law in holding that the Income-tax Officer had no option but to compute and allow the depreciation to the assessee in this year? 2. Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in considering Rs. 5,400 as the perquisite value for the car used by the executives of the company under section 40A(5)? 3. Whether, on the facts and in the circumstances of the case, the loss of Rs. 66,698 due to fluctuation in foreign exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach such employee and restricted the perquisites to 1/5th of the salary in the case of each employee. The value of the perquisites is not to exceed 1/5th of the salary paid to an employee under section 40A(5) of the Act. It was for that reason that the Assessing Officer disallowed the expenditure incurred by the assessee-company in providing facilities and perquisites to the employees in excess of 1/5th of the salary. In appeal filed by the assessee against the disallowance, the Commissioner of Income-tax upheld the order of the Assessing Officer. In further appeal, the Tribunal took the view that the perquisite value of the two cars provided for personal use to the directors, V. K. Anand and T. K. Dhingra, should be restricted to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alary paid to the employee. In the cases of the two employees, namely, V. K. Anand and T. S. Dhingra, the Assessing Officer, after calculating the salary, computed the value of the perquisites and restricted the value to 1/5th of the salary as under : "1. Shri V. K. Anand : Rs. Rs. A. Salary 45,871 Leave encashment 583 Bonus 360 46,814 Less : Allowable under the Act 46,814 B. Perquisites (a) Rent-free accommodation provided by the company. 13,500 (b) Personal servants salaries 2,400 (c) Medical expenses reimbursed 3,379 (d) Car for personal use as discussed above 31,135 (e) Club membership fee paid by the assessee company. 500 50,914 Less : Allowable under the Act (1/5th of salary) 9,363 41,551 Disallowed : Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the Assessing Officer was right in disallowing deduction of the value of perquisites in excess of 1/5th of the salary paid to the employee. The answer to the question is in the affirmative, i.e., in favour of the Revenue and against the assessee. Question No. 1 in assessee's reference : The controversy projected through the question whether the Assessing Officer has to allow depreciation to an assessee without there being a claim in this behalf has been examined by a Division Bench of this court in Beco Engineering Co. Ltd. v. CIT [1984] 148 ITR 478. In that case, the assessee had filed a revised return in which he did not claim depreciation, etc., which had been claimed in the original return. It was held that since the assessee di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the initial year. The assessee paid two instalments of 25,000 D.M. each during the accounting year relevant to the assessment year under reference. The rupee equivalent of these instalments exceeded the amount as per the original exchange rate. The assessee had also purchased a machine on direct deferred payment basis. The rupee equivalent of the instalments paid for that machine also exceeded the original price by an amount of Rs. 4,308. The total amount of loss due to fluctuation in the exchange rate was thus Rs. 66,698. The Tribunal upheld the view that the loss occurring due to fluctuation in the exchange rate was not revenue expenditure. The Assessing Officer was, however, directed to verify the arithmetical correctness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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