1988 (12) TMI 73 - HC - Income Tax

Summary

Issues involved: Determination of whether rent-free accommodation provided to the assessee by his employer while on tour in India is exempt u/s 10(14) of the Income-tax Act, 1961.

Summary:
The assessee, a permanent employee of a UK firm, was deputed to India for supervising erection work under an agreement with the West Bengal State Electricity Board. The Income-tax Officer added a sum as perquisite for the rent-free accommodation provided by the foreign company. The Commissioner of Income-tax (Appeals) deleted the addition, citing exemption u/s 10(14) for expenses incurred in the performance of official duties. The Tribunal, by majority decision, upheld the view that the rent-free accommodation was exempt u/s 10(14) as it was provided for discharging official duties during visits to India.

Analysis:
Section 10(14) of the Income-tax Act, 1961, exempts special allowances or benefits specifically granted to meet expenses wholly, necessarily, and exclusively incurred in the performance of official duties. The Tribunal found that the rent-free accommodation provided to the assessee was necessary for discharging his duties while supervising the erection of gas turbines at different locations in India. The visits were directly related to his official duty, and the expenses incurred were held to be wholly and exclusively for that purpose, not constituting a benefit to the assessee.

Conclusion:
The Tribunal's decision was deemed correct as the rent-free accommodation was provided for the performance of official duties during the assessee's visits to India. Therefore, the accommodation expenses were exempt u/s 10(14) of the Income-tax Act, 1961. The question referred in the case was answered in the affirmative and in favor of the assessee.