1989 (9) TMI 70 - HC - Income Tax

Summary

Issues involved: Interpretation of section 28(iv) of the Income-tax Act, 1961 regarding inclusion of perquisites in the income of the assessee.

Summary:
The High Court of Madhya Pradesh was presented with a reference under section 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal, Indore Bench, regarding the inclusion of a sum of Rs. 3,600 in the income of the assessee under section 28(iv) of the Act. The assessee, a partner in a partnership firm, received benefits from the firm such as the use of residential premises, car, and telephone. The Income-tax Officer included Rs. 15,000 as the value of perquisites in the assessee's income, which was later reduced to Rs. 9,500 by the Appellate Assistant Commissioner. Upon further appeal, the Tribunal determined that only Rs. 3,600 should be included in the income of the assessee under section 28(iv) of the Act.

The court, after considering the arguments presented, referred to precedents such as CIT v. P. M. Muthuraman Chettiar [1962] 44 ITR 710 and CIT v. Ramniklal Kothari [1969] 74 ITR 57, held that any benefit or perquisite received by a partner from the firm's business is chargeable to income-tax under section 28(iv) of the Act. Therefore, the court agreed with the Tribunal's decision to include Rs. 3,600 in the income of the assessee.

In conclusion, the court answered the question referred by the Tribunal in the affirmative, ruling against the assessee. The parties were directed to bear their own costs in this reference.