2008 (7) TMI 616 - AT - Income Tax

Summary

Issues Involved:
1. Change in Residential Status
2. Perquisite Value of Accommodation

Summary:

1. Change in Residential Status:
The assessee contested the change in their residential status from 'not ordinary resident' to 'resident'. The assessee had filed their return of income as 'not ordinary resident', but the case was reopened u/s 148 following a decision by the Gujarat High Court. The Assessing Officer (AO) treated the assessee as 'resident' and completed the assessment. The assessee appealed to the CIT(A), providing a passport copy and details of their stay in India over the past 10 years, requesting acceptance of these documents under rule 46A of the Income-tax Rules. The CIT(A) did not admit the additional evidence, confirming the AO's decision. The Tribunal restored the issue back to the AO for fresh determination of the residential status after verifying the documentary evidence, allowing the grounds for statistical purposes.

2. Perquisite Value of Accommodation:
The assessee challenged the CIT(A)'s decision directing the AO to adopt the perquisite value of accommodation provided by the employer at 10% of the salary. The AO had adopted this value in the absence of a Rent Agreement. The assessee argued that the actual rent paid by the employer was less than 10% of the salary, hence the actual rent should be considered as the perquisite value. The CIT(A) upheld the AO's decision, referencing rule 3(a)(iii) and relevant case law, stating that the value could not be less than 10% of the salary. The Tribunal found merit in the assessee's contention that the fair rental value should be considered if it is less than 10% of the salary, as per the 2nd proviso to rule 3(a)(iii). The issue was restored to the AO to determine the fair rental value in accordance with the guidelines prescribed by the Hon'ble Bombay High Court in M.A.E. Paes v. CIT and other relevant provisions, allowing the ground for statistical purposes.

Additional Appeal:
In a related appeal, the issue was identical to the one regarding the perquisite value of accommodation. The Tribunal reiterated its earlier directions and restored the matter to the AO for fresh determination, considering the applicability of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, which was applicable for the year under consideration.

Conclusion:
Both appeals were allowed for statistical purposes, with directions for fresh determination by the AO on the issues of residential status and perquisite value of accommodation.