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TMI Blog1982 (5) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... he Kerala High Court in the assessee's own case in ITR No. 82/1978. It has been held by the Kerala High Court that the expenditure and depreciation on the buildings occupied by the employees of the assessee should be taken into account for working out the amount to be disallowed under s. 40 (a)(v)/40A(5). Similarly, it has also been held that it is not the entire amount of the expenditure on the motor cars of the assessee used by its employees but only such part of the expenditure and depreciation as is attributable to the personal use of the cars by the employees that should been taken into account for the application of s. 40(a)(v)/40A(5). The CIT (A) has held that depreciation and expenditure on the buildings should not be taken into acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel has filed before us date of the rent charged from the employees and the municipal valuation for the asst. yr. 1976-77. The position is as follows: Name of the employees Rent collected during the accounting year Municipal valuation (1) P.J. Weavers Rs. 7,131.00 Rs. 4,850.00 (2) D.W. Mc Cririck Rs. 4,897.50 Rs. 4,250.00 (3) K.G. Nanda Rs. 5,280.00 Rs. 4,650.00 On this basis, it is contended that the assessee is charging fair market rent and, therefore, there can be no question of disallowing the expenditure and depreciation on such buildings as s. 40(a)(v) would not be applicable in the circumstances. 4, On behalf of the Department it is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The Deptl. Rep suggested that the municipal value charged by the assessee may not be the fair rent. In support of this he relied on the decision of the Kerala High Court in ITR No. 166 of 1979, We have perused this judgment. It has only been held that while the valuation fixed by the local authorities is certainly a relevant factor which has to be taken into account by the IT authorities (for the purpose of determining the annual value) it is by no means binding or conclusive on the IT authorities and it is perfectly open to the ITO and the appellate authority to come to their independent conclusion on the materials available before them as to what would be a fair and just estimate of the income denied from the property. It has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is part of this provision is that the assets of the assessee should have been used either wholly or partly by the employees for their own purposes or benefit. No qualification is made to the effect that the asset should have been used by the employee freely without payment of any consideration. The decision of the Kerala High Court in the assessee's own case for the asst. yr. 1974-75 clearly defines the extent to which the expenditure on such assets is to be considered for the purpose of these two provisions. In paragraph 11 where the expenses on the motor cars were under consideration, it is observed that regard being had to the object of the provision, it is evident that the control is on the amount expended on the asset which is used by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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