Petrol Expenses Reimbursed to Director

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S Menon (Querist)
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24 February 2010 Hi Sir,

Whether the petrol expenses reimbursed to the managing director(not in the payroll)of his personal car used for official/personal purpose be allowed as an expenditure as per the Income Tax Act? Is there any documentation required to be obtained from him to substantiate that the car being used for official purposes.

Also what will be the treatment of such reimbursement in his hands..Will it be treated as perquisites? As mentioned earlier he is not in the company payroll.

Thanks in advance....
San

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)
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24 February 2010 Yes, The company should maintain log book,vouchers and bills to sustain the fact that these arethe exps. made for company work.

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)
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24 February 2010 It will be taxable to the extent of amount used for personal purpose, and to find out that employee should maintain a logbook certified by employer and should also get certificate from employer. Amount certified in aforesaid documents will be allowed to the extent of official purpose and other amount will be taxable in his hands as used for personal purposes.

If he does not make available those documents then taxable amount will be AMOUNT PAID BY EMPLOYER reduced by Rs. 1800/2400 pm + Rs. 900 pm

The taxable amount will be perquisites in his hands.

If he is not on payroll of company then then all that amount will be business expenses in the hands of company and in the hands of receipent it will be exempt only upto used for official purpose.

Regards!!!
Dinesh s. Adhikari

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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24 February 2010 Agreed with Mr.Dinesh

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