2002 (7) TMI 411 - AT - Income Tax

Summary

Issues:
1. Valuation of perquisite for rent-free accommodation.
2. Disallowance of deduction under section 80CCB.
3. Deduction under section 80GG of the IT Act.

Issue 1: Valuation of perquisite for rent-free accommodation:
The appeal was against the CIT(A) order for the assessment year 1992-93. The dispute centered around the perquisite value of accommodation provided to the employee. The Assessing Officer initially valued the perquisite at 10% of the salary but later allowed a deduction under section 154 of the Act for the recovery made from the assessee. The employer, a Govt. Company, had fixed the standard rent at Rs. 275 P.M. The assessee argued that as the recovery exceeded this amount, nothing should be included in the income as perquisite. The ITAT held that only the standard rent fixed by the employer should be considered as a perquisite. Since the recovery exceeded the standard rent, no amount was includible as perquisites. The addition sustained by the CIT(A) was deleted.

Issue 2: Disallowance of deduction under section 80CCB:
The second ground of appeal related to the disallowance of deduction under section 80CCB due to the investment not being made out of income chargeable to tax. The assessee argued that the income was over Rs. 1 lakh, and the investment qualifying for deduction under section 80CCB was insignificant. Citing relevant decisions, the assessee contended that the deduction should be allowed. The ITAT held in favor of the assessee, stating that the addition sustained by the CIT(A) was not justified and thus deleted it.

Issue 3: Deduction under section 80GG of the IT Act:
The third ground of appeal concerned the deduction under section 80GG for arrears of rent paid to the employer. The Assessing Officer and CIT(A) denied the deduction as no rent was paid during the year. The assessee claimed to have paid the rent and fulfilled all conditions for the deduction. The CIT(A) referred to sections 30 and 31 regarding rent, rates, and taxes, stating they do not allow for arrears of rent deduction. The ITAT, after reviewing the provisions of section 80GG and the submissions, found no evidence supporting the claim. Consequently, the ITAT upheld the CIT(A)'s decision to disallow the deduction under section 80GG, dismissing the ground of appeal raised by the assessee.

In conclusion, the ITAT partially allowed the appeal filed by the assessee, ruling in favor of the assessee on the valuation of perquisite for rent-free accommodation and disallowance of deduction under section 80CCB, but against the assessee on the deduction under section 80GG of the IT Act.