2001 (12) TMI 16 - HC - Income Tax

Salary Perquisites Rent-free Accommodation - 1. Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the value of perquisite on account of residential house known as Modi Bhawan was not assessable under section 28 read with section 2(24)(iv) of the Income-tax Act 1961 but under section 17(2) of the Income-tax Act 1961? - 2. Whether on the facts and in the circumstances of the case the method of assessing its value was correct in law and whether the Tribunal was justified in reducing it from the value assessed by the Appellate Commissioner? These references are accordingly answered in favour of the assessee holding that the value of perquisite on account of residential house was not asses sable under section 28 read with section 2(24)(iv) of the Income-tax Act but under section 17(2) of the said Act and the Tribunal adopted the correct method of assessing its value.

Summary

Issues:
1. Assessment of value of perquisite on residential house under Income-tax Act.
2. Correct method of assessing the value of the perquisite.

Issue 1: Assessment of value of perquisite on residential house under Income-tax Act:
The case involved questions regarding the assessment of the value of a residential house known as "Modi Bhawan" as a perquisite under the Income-tax Act. The Income-tax Appellate Tribunal initially decided in favor of the assessee, holding that the provision of section 17(2) would be applicable in this case. The Income-tax Department sought reference against this decision, leading to the matter being transferred to the High Court. Another question arose regarding the value of rent-free accommodation provided to the assessees, which was determined based on the standard rent fixed by the Rent Controller's orders. The Tribunal's decision was upheld, and it was concluded that the value of the perquisite on the residential house was not assessable under section 28 read with section 2(24)(iv) of the Income-tax Act but under section 17(2) of the Act.

Issue 2: Correct method of assessing the value of the perquisite:
The court examined whether the method of assessing the value of the perquisite was correct in law. The Income-tax Appellate Tribunal's finding of fact was crucial in determining the applicable provision under the Income-tax Act. It was noted that even if the perquisite was treated as income under section 2(24) as a perquisite given to the director, the value had to be determined based on the standard rent fixed for such housing accommodation. The court emphasized that the value of the perquisite had to be assessed in accordance with the formula established in previous case law. Consequently, the Tribunal's method of assessing the value was deemed correct, and the references were answered in favor of the assessee.

In conclusion, the judgment addressed the assessment of the value of a perquisite on a residential house under the Income-tax Act, clarifying the applicable provisions and the correct method of determining the value. The decision reaffirmed the Tribunal's findings and provided detailed reasoning for upholding the assessment in favor of the assessee.