1990 (1) TMI 314 - AT - Income Tax

Summary

Issues: Valuation of rent-free accommodation provided to the assessee by the employer.

Analysis:
The issue in this case revolves around the valuation of rent-free accommodation provided to the assessee by the employer. The assessee, a foreign national, arrived in India and was initially accommodated in a hotel due to the unavailability of suitable housing. The employer paid the hotel bill of Rs. 5,75,000 for the five-month stay, recovering Rs. 2,000 per month from the assessee for food, refreshments, and laundry. The Income Tax Officer (ITO) treated the entire hotel bill as a perquisite, resulting in an addition of Rs. 5,49,941 to the assessee's income. On appeal, the Commissioner (Appeals) determined the perquisite value at Rs. 18,370 for the five-month stay, considering subsequent accommodation provided at Rs. 2,500 per month. The Revenue contended that the ITO's valuation based on the hotel bill was correct, while the assessee argued that the hotel bill did not reflect the true perquisite value, citing a court decision to support the position.

The Tribunal analyzed the circumstances and noted that the employer was obligated to provide residential accommodation to the assessee, who was temporarily housed in a hotel until suitable housing was available. Once alternative accommodation was provided at Rs. 2,500 per month, the Tribunal found it inappropriate to base the perquisite value solely on the hotel bill. Referring to a court decision involving a gift to an employee, the Tribunal emphasized that the value of the perquisite should reflect the actual benefit received by the employee. The Tribunal concluded that the hotel bill could not accurately determine the perquisite value in this case, affirming the Commissioner (Appeals)'s valuation at Rs. 18,370. Consequently, the Tribunal upheld the Commissioner (Appeals)'s decision and dismissed the Revenue's appeal.