1971 (8) TMI 69 - HC - Income Tax

Whether the interpretation given by the Appellate Tribunal to Explanation (2) to rule 3 of the Income-tax Rules, 1962, was legal and proper and the consequent direction given for the deletion of income-tax paid by the employer, and the value of perquisites, viz., the use of the car, electricity charges and professional tax, reimbursed by the employer from the quantum of salary for computing the value of rent-free accommodation, was legally correct and justified - answer to the question is partly in the negative and against the assessee and partly in the affirmative and against the department

Summary

The High Court of Kerala addressed a reference under the Income-tax Act regarding the interpretation of Explanation (2) to rule 3 of the Income-tax Rules, 1962. The court held that income-tax paid by the employer forms part of the salary for determining the value of rent-free accommodation. However, the use of a car was excluded from the salary calculation, while electricity charges and professional tax were considered part of the salary. The judgment was partially in favor of the assessee and partially against the department.