Circular No. 97

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

What this is

Circular No. 97 was issued by the Central Board of Direct Taxes on 14 December 1972. 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.

What it does

Allows the prescribed monthly deduction for maintenance of a conveyance for the period during which the vehicle was temporarily out of use because it was under repair. The Board's reasoning is that during the temporary non-use the assessee would have been spending on a substitute conveyance, and the repair charges are not separately allowable. The certificate about continuous use of the vehicle for the purposes of employment should cover the repair period as well.

Why it was issued

A question had arisen, following the Board's circular No. 15 dated 8 May 1969, whether an assessee who owns a conveyance and uses it for his employment is entitled to the deduction for a period when it was off the road for repairs.

Who it reaches

Salaried employees owning and using a conveyance for their employment
Employers taking the certificate of continuous use on record
Assessing Officers examining the conveyance deduction

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.16	s.19

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

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

Maintenance of conveyance - Allowance of deduction therefor when vehicle is in repair - I am directed to invite a reference to the Board’s Circular No. 15 [F. No. 40/22/69-IT(A-I)], dated 8-5-1969 and to say that in the manner of standard deduction from "salaries" under section 16(iv), a question has arisen, viz., whether an assessee who owns a conveyance and uses it for the purposes of employment is entitled to the standard deduction for the period during which it was temporarily out of use because it was under repairs. Since during the temporary non-user of the conveyance and the assessee would have been spending on substitute conveyance and further the repair charges are not separately allowable, the Board desire that the assessee may be allowed the prescribed monthly deduction for the period of repairs. The certificate about continuous use of the vehicle for purposes of employment should cover the repairs period also.
Circular : No. 97 [F. No. 200/29/72-IT(A-I)], dated 14-12-1972.

What to watch

The certificate of continuous use must cover the repair period; without that the deduction for those months is exposed.
The concession is for temporary non-use during repairs, not for a period when the vehicle is not used for the employment at all.
Repair charges are not separately deductible; the monthly deduction is what covers them.
The record's own heading notes that the clauses of section 16 this deals with were substituted or omitted by the Finance Act, 1974 with effect from 1 April 1975, so the deduction it concerns did not survive that change.

Where you meet it

Only in an old salary assessment where the conveyance deduction was proportionately disallowed for months the vehicle was in the workshop.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 119 — Amendment of the Income-tax Rules under section 10 of the Income-tax Act, 1961 12 May 2006
Notification No. 13 — A notification under section 16 of the Income-tax Act, 1961 12 January 2004
Notification No. 12 — Amendment of the Income-tax Rules under section 16 of the Income-tax Act, 1961 12 January 2004
Circular No. 654 — Financial Year 1993-94 22 July 1993
Circular No. 629 — Financial Year 1992-93 31 July 1992
Circular No. 537 — Financial Year 1989-90 12 July 1989

← Circular No. 98 · Circular No. 96 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.