Query:
Company X Ltd is reimbursing the following expenses to Mr. A. Manager-Finance of the company.
1. Hire Charges of CAR : Rs 5,000
2. Fuel Charges : Rs 11,000
3. Driver Salary : Rs 8,000
4. Parking Charges : Rs 3,000
Total Rs 27,000
Facts of the case:
1. X Ltd. hires a vehicle specifically for Mr. A and making a tripartite agreement with the car owner, Mr. A and the Company -X LTD. The Hire charges will be directly paid by the company to the car owner.
2. Mr. A using that vehicle for official as well as for private purpose and maintaining the log book of the entire journey, and at the end of the month according to log book Mr. A claims the reimbursement of the fuel expenses incurred for the official purpose.
3. At the end of the month Mr. A paid the driver salary and the parking fees and claims the reimbursement from the company.
We would like to know if X Ltd reimburses the fuel charges, Driver Salary, Parking charges to Mr A and paid the rental charges to the car owner, then Pls advice, whether these expenses are allowed as business expenses of the company.
Further, we would like to know, whether Mr A is liable for pay any income tax on account of the above.
(Note: After FBT being removed, a lot of confusion arises regarding the perquisite and income tax treatment on the above transaction)
Bharat
CAclubindia
