Deductions under clause (i) as it stood prior to its substitution, and under clauses (iii) to (v) as they stood prior to their omission, by Finance Act, 1974 with effect from 1-4-1975 - Clarifications on certain issues retained in the compendium for reference purposes
Circular No. 44 was issued by the Central Board of Direct Taxes on 4 August 1970. Its subject is Deductions under clause (i) as it stood prior to its substitution, and under clauses (iii) to (v) as they stood prior to their omission, by Finance Act, 1974 with effect from 1-4-1975 - Clarifications on certain issues retained in the compendium for reference purposes.
This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.
Corrects the working of the conveyance standard deduction for employees who own no vehicle. Reconsidering the two examples in Annexure II to Circular No. 36 dated 25 March 1970 in the light of the intended meaning of section 16(iv) as substituted by the Finance Act, 1970, the Board says that a salaried employee who owns no conveyance, and equally one who owns a bicycle or any other conveyance that is not a motor car, motor cycle, scooter or moped, is entitled to a standard deduction of Rs. 35 for each calendar month or part of a month in the period of his employment during the year. The employee need not prove that he actually spent anything on travelling for his employment, and disbursing officers must build this deduction into the tax deducted from his salary.
The examples in the earlier circular did not reflect what the substituted clause was intended to give, and employees without a vehicle were at risk of being denied the deduction.
Deductions under clause (i) as it stood prior to its substitution, and under clauses (iii) to (v) as they stood prior to their omission, by Finance Act, 1974 with effect from 1-4-1975 - Clarifications on certain issues retained in the compendium for reference purposes
Deduction to salaried employees who do not own any conveyance as also those who own a bicycle - I am directed to invite a reference to this Ministry’s Circular No. 36 [F. No. 275/42/70-ITJ], dated 25-3-1970 [printed under section 192] and to say that the two examples in Annexure II to the above circular have been further considered in the light of the intended import of clause (iv) of section 16, as substituted by the Finance Act, 1970. Salaried employees who do not own any conveyance as also those who own a bicycle or any other conveyance, not being a motor car, motor cycle, scooter or other moped, are entitled to standard deduction of Rs. 35 for each calendar month or part thereof comprised in the period of their employment during the year and in order to be eligible for this deduction it is not necessary for the employee to prove that he had actually incurred any expenditure on travelling for the purposes of his employment. The aforesaid deduction should, therefore, be taken into account in calculating tax deducted at source from the salary income of such employees.
Circular : No. 44 [F. No. 275/42/70-ITJ], dated 4-8-1970.
In an old salary computation or short-deduction dispute where the conveyance deduction was refused to an employee owning no vehicle.
Source: the Income Tax Department’s own published text — its page for this instrument.
