1982 (10) TMI 91 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 6,100 as perquisite in the assessment for the assessment year 1978-79.
2. Determination of the market value of a car purchased by the assessee from his employer.
3. Whether the difference in the price of the car constitutes a taxable benefit under section 17(2) of the Income-tax Act, 1961.

Analysis:
1. The appeal was filed against the AAC's order upholding an addition of Rs. 6,100 as proposed in the assessment for the assessment year 1978-79. The assessee, a managing director, purchased an ambassador car and an air-conditioner from his employer at book value. The ITO contended that the prices were understated, leading to the addition. The AAC sustained a difference of Rs. 6,100 as the value of perquisite. The assessee argued that the employer gave the car at book value for services rendered, justifying the price. The department claimed the benefit was taxable under section 17(2) based on the plain reading of the definition of 'perquisite.'

2. The Tribunal considered whether the assessee obtained the car at a concessional price. The market value of the car was disputed, with the AAC estimating it at Rs. 10,000. The Tribunal found it difficult to accept the assessee's claim that the market value was only Rs. 3,900. The transaction was deemed commercial, not solely based on employment. The absence of norms for evaluating such benefits indicated non-taxability. The Tribunal referenced a decision on concessional loans, highlighting that not all benefits are taxable under section 17(2). It was concluded that the benefit from the sale of the car could not be treated as a perquisite under section 17(2).

3. The Tribunal held in favor of the assessee, allowing the appeal and granting relief of Rs. 6,100. The sale of articles at book value was not considered a taxable benefit akin to concessional loans. The Tribunal emphasized that the transaction was primarily a sale between parties, not necessarily linked to employment benefits. The revenue's practice and acceptance of decisions in the employer's case supported the view that the benefit did not qualify as a perquisite under section 17(2).