Meaning of tax terms
Meaning of “In respect of expenditure incidental to employment”
The meaning of in respect of expenditure incidental to employment under section 16 of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here is an excerpt of the court’s order in which the Hon’ble High Court tried to explain the meaning of in respect of expenditure incidental to employment.
Meaning of in respect of expenditure incidental to employment defined by court
The phrase “in respect of expenditure incidental to employment” used in section 16 of the Income Tax Act came up before hon’ble Gujarat High Court in CIT Vs. K.R. Patel [1994] 205 ITR 405 (GUJ.) and it explained
Meaning : The words ‘in respect of expenditure incidental to the employment’ only suggest the nature of the deduction or the head under which the deduction is to be granted, and they are not employed by the legislature with a view to make the actual expenditure a condition precedent to the grant of deduction.
The said words are descriptive of the nature of deduction to be granted and no further implications can be read therein.
Secction 16 of Income Tax Act
Deductions from salaries.
16. The income chargeable under the head “Salaries” shall be computed after making the following deductions, namely :—
(i) [***]
(ia) a deduction of 64[fifty thousand] rupees or the amount of the salary, whichever is less;
(ii) a deduction in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees, whichever is less;
(iii) a deduction of any sum paid by the assessee on account of a tax on employment within the meaning of clause (2) of article 276 of the Constitution, leviable by or under any law.
(iv) [***]
(v) [***]
In this article, you can get the guidance from high court on the meaning of in respect of expenditure incidental to employment under section 16 of the Income Tax Act.
Updated up to Finance Act 2021.
