2000 (11) TMI 1184 - AT - Income Tax

Summary

Issues Involved:
1. Whether the value of accommodation provided to employees at the rig site in the form of steel bunkers is assessable as a perquisite u/s 17(2).
2. Whether the value of free meals provided to employees at the rig site is assessable as a perquisite u/s 17(2).

Summary:

Issue 1: Accommodation as Perquisite u/s 17(2)
The Tribunal examined whether the accommodation provided to employees in steel bunkers at the rig site constitutes a perquisite u/s 17(2). The accommodation was essential for executing drilling work and was not residential in nature. The Tribunal noted that the accommodation was a necessity for the performance of duties and did not provide any personal advantage to the employees. The Tribunal relied on the definition of "perquisite" as a personal advantage and concluded that the accommodation did not meet this criterion. The Tribunal also referenced the decision in CIT v. D. S. Blackwood [1989] 178 ITR 470 (Cal), which held that accommodation provided necessarily for the discharge of official duty cannot be construed as a perquisite. Consequently, the Tribunal held that the accommodation provided in steel bunkers did not constitute a perquisite u/s 17(2).

Issue 2: Free Meals as Perquisite u/s 17(2)
The Tribunal also considered whether the free meals provided to employees at the rig site were assessable as a perquisite u/s 17(2). The meals were provided as part of the employment contract and were necessary for the employees to perform their duties effectively. The Tribunal noted that the provision of meals did not result in any personal advantage to the employees and was essential for their survival at the work site. The Tribunal referenced the decision in Hyundai Heavy Industries Co. Ltd. v. ITO [1994] 51 ITD 34, which held that the provision of food in the course of performing official duties cannot be considered a perquisite. The Tribunal concluded that the free meals provided to employees did not constitute a perquisite u/s 17(2).

Conclusion:
The Tribunal ruled in favor of the assessees, holding that neither the accommodation in steel bunkers nor the free meals provided at the rig site constituted perquisites u/s 17(2) of the Income-tax Act, 1961. The Tribunal emphasized that these provisions were necessary for the performance of official duties and did not provide any personal advantage to the employees.