1986 (4) TMI 109 - AT - Income Tax

Summary

Issues:
- Dispute over addition of perquisite value for accommodation provided at concessional rent by the employer.

Analysis:
1. The appeals before the ITAT Delhi-B relate to the assessment years 1980-81, 1981-82, and 1982-83. The common ground raised in all appeals is the deletion of the addition made by the assessing officer for the value of perquisite related to accommodation provided by the employer at concessional rent. The assessing officer added Rs. 10,450 each year as the fair rental value of the accommodation.

2. The assessee, an employee of a company, was allotted a residential quarter at a monthly rent of Rs. 50. The assessing officer considered this allotment at a concessional rent as a perquisite due to the employment relationship. The CIT(A) disagreed with this view and deleted the addition. The Revenue appealed this decision, arguing that similar accommodation in the area could fetch a rent of 50 paise per sq. ft. The assessee contended that the accommodation was not provided based on a service contract but on availability, citing the applicability of the Rent Control Act and the fixed standard rent.

3. During the hearing, the Departmental Representative supported the assessing officer's decision, emphasizing the employment-based allotment and market rent comparison. The assessee's counsel argued against the concessional rent characterization, pointing to the absence of a service contract and the Rent Control Act's influence. Legal precedents were cited to support the argument, highlighting the standard rent fixation's impact on the employer's ability to recover more than the declared rent.

4. The ITAT considered the documentary evidence, including a certificate from the employer stating no service condition for providing accommodation and the Rent Controller's order fixing the standard rent at Rs. 50 per month. The Tribunal noted that the accommodation was not allotted under a service contract and that the Rent Control Act applied, restricting the employer from charging more than the standard rent. A previous Tribunal decision supported the assessee's position based on similar facts, further reinforcing the approval of the CIT(A)'s order.

5. Ultimately, the ITAT found no merit in the Revenue's appeals and dismissed them, upholding the deletion of the perquisite addition for the accommodation provided at concessional rent.