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TMI Blog1995 (2) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the value of free boarding and lodging facilities provided to the drilling crew. Therefore, the ITO felt that the value of these items has to be estimated. In the earlier years namely 1986-87, the perquisite value of food in the case of employees of M/s Polservice was estimated at Rs. 60 per day and it has been upheld by the learned CIT (Appeals) vide his order dated 1-7-1991. Taking that into consideration, the perquisite value of food in respect of drilling crew was taken at Rs. 100 per head per day for assessment year 1990-91. 3. Similarly, no details were made available regarding valuation of free accommodation. Therefore, the ITO felt that this was also a case of estimate. The ITO stated in his assessment order that drilling crew normally provided with well furnished accommodation which includes all the facilities for a decent living. Therefore, he estimated the value of free accommodation at Rs. 100 per day to be reasonable. The assessee contended that they should not be treated as perquisites in as much as these are necessities considering the nature of work in which the crew is involved. Further they contended that these facilities were provided not by the employer b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is very essential for me to look into the contractual terms entered into by the ONGC with M/s Polservice with regard to the deployment of technical personnel for conducting drilling operations of oil wells in India and also for conducting seismic survey. Copy of the contract was provided at pages 1 to 15 of assessee's paper book dated 9-9-1987. ONGC which was referred to as the 'owner' while M/s Polservice, Poland having its Head Office at Warsaw was referred to as a 'contractor' in the contract. In the preamble of the Agreement it is stated that the 'owner' was having mechanical land drilling rigs for drilling and for exploration and development of oil and natural gas in onshore areas. The contractor was described as similarly engaged in the onshore drilling business and was in a position to provide to the owners expatriate supervisory staff and personnel with expertise in operation and management of onshore rigs for deep oil well drilling. It was stated that the 'owner' desires to utilise the services of three crews of such expatriate personnel of the contractor for performing, maintaining and managing the operation of three land rigs for the exploration and development of oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the contractor's personnel at the drill site/camp. 8. Therefore, after going through the stipulations in the contract it is crystal clear that the obligation to provide free food and housing for the contractor's personnel is that of the owner, namely ONGC and it is also made very clear that the expatriate technicians provided by M/s Polservice were its own employees and were never considered to be the employees of ONGC. It is stated that onshore drilling takes place at far flung areas and since the contract was to operate the rig or carry on drilling operations all the 24 Hrs. with two shifts of 12 Hrs. each, the owner himself is interested to see that the expatriate technicians should be present at the work site all the 24 hours. Most often it is stated that the drilling would take place in hilly regions where there may not be any habitation whatsoever in and near the drill site and, therefore, the owner for the sake of its own advantage of having the services of the expatriate technicians all the 24 Hrs. would provide temporary shelters at drill site mostly in bunkers or tents etc. and would also provide free food. The free food and free accommodation would be provided to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, 1922, the right of a person to occupy free of rent as a place of residence any premises provided by the employer is a perquisite for the purposes of this section and is usually taken at 10 per cent of the emoluments of the person concerned for the purposes of his income-tax assessments. It has been represented that military personnel serving in forward operational areas and in isolated localities on the frontier and other posts are provided with rent free accommodation consisting of dug out trenches, places in open fields and under the trees etc. As the accommodation furnished has no rental value, no addition should be made for income-tax purposes to the total income of the personnel concerned in respect of the value thereof. Where, however, the accommodation provided has a rental value or the value thereof can be ascertained an addition therefor should be made for income-tax purposes subject to the usual maximum of 10% of the emoluments." The learned counsel for the assessee had brought to our notice Acharya Shuklendra's Law of Income-tax, Vol. I, Second Edition, pages 846 and 847 in which the following is stated: (ix) Perquisites exempt from tax --- The following p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of free accommodation and free food were not proceeding from the employees themselves but from outsiders like ONGC. Therefore, we hold that they cannot be considered to be perquisites and the value of those perquisites cannot be added in the hand of the assessees. 12. Before the benefit of free boarding and free accommodation extended to these assessees by ONGC is considered to be a perquisite, it should bear the character of income within the meaning of section 2(24) of the Income-tax Act. If the money value of these benefits cannot be considered to be income then nothing can be added in the hands of these assessees towards alleged perquisite value of free boarding or free accommodation. In this connection, section 2(24) which is no doubt an inclusive definition of income can be examined. Section 2(24)(iva) which was inserted by Finance Act (No. 2) of 1980, w.e.f. 1-4-1980 is as follows : "(iva) the value of any benefit or perquisite, whether convertible into money or not, obtained by any representative assessee mentioned in clause (iii) or clause (iv) of sub-section (1) of section 160 or by any person on whose behalf or for whose benefit any income is receivable by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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