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TMI Blog1993 (7) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings. However, Assessing Officer rejecting the objection made an addition of Rs. 1,17,170 to the disclosed income. 3. Assessee appealed to the CIT (Appeals) who has upheld the validity of the re-opening of assessment. However, the addition to the tune of Rs. 35,152 alone was sustained by taking the economy fare in respect of three tickets as against the first class fare of Rs. 32,434 of 5 tickets taken by the Assessing Officer. 4. Revenue is not in appeal against the decision of the CIT (Appeals). However, assessee is aggrieved. 5. Learned counsel for the assessee contested the validity of the proceedings as well as the quantum of income. The learned D.R., on the other hand, supported the orders of the revenue authorities. 6. We have given our careful consideration to the rival contentions. The first appellate authority has reproduced the contents of the agreement dated18-2-1976between the assessee and the Air India reading as under: "I am happy to confirm that to compensate you for the low rental of Rs. 4,000 per month which is being charged for the entire property, our Headquarters have agreed to provide you with three round trip tickets Delhi/Amsterdam/Delhi per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of free air tickets provided to the assessee was Rs. 35,152 consider a sum of Rs. 24,000 as a reasonable value to be added to the actual rent received by the assessee for determination of the annual letting value of the property. The gross annual letting value of the property thus would be Rs. 48,000 + Rs. 24,000 out of which assessee would be allowed statutory deduction on account of house-tax, repairs, ground rent, etc. We direct accordingly. 7. The validity of the proceedings under section 147 is also upheld. In this case assessee had not made full disclosure of the facts, before the Assessing Officer at the time of filing of the return. The Assessing Officer having received information about assessee having been granted three free tickets of AirIndiain order to compensate for the low rentals charged for the property, was justified in re-opening the assessment under section 147. 8. The appeal of the assessee is partly allowed. Per A. Kalyanasundharam, AM. 9. I have perused the order made by my learned Brother in regard to the claim of the assessee-HUF on the issue relating to the amount to be included in regard to the value of free tickets allowed by AirIndiafor the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint the obvious conclusion has to be that it is the value of the free tickets that would have to be treated as additional rent. My learned Brother has observed that the full value of the tickets as such cannot be treated as part of the actual rent received by the assessee. He has further observed that a distinction should be made between the actual rent received and perquisite by way of free air tickets. The reading of the section, in my view, does not allow the perquisite value being taken because the section does not provide for perquisites, its valuation etc., as is provided for in the case of salaried employees under section 17 of the Act. In my view, the annual rent received, which is used in section 23(1)(b) of the Act means not only the rent received In the shape of cash but also the rent that is received in the shape of kind. In the instant case, the rent that is received in kind is Rs. 35,152 being the value of the free tickets. Therefore, in my view, the rent or gross rental of the property would be Rs. 83,152 [Rs. 48,000 (4,000 x 12) + Rs. 35,152--value of free tickets] per annum. The appeal should have been dismissed as without any merit. I hold so. Per Shri M.A. Bakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of rent and as a sequel thereof Air India had agreed to provide the assessee with complimentary tickets for visiting abroad to compensate the assessee for the low rental of Rs. 4,000 Per month. The Assessing Officer reopened the assessment under section 148 and brought the value of these tickets, which was put at Rs. 1,17,170 as further rent of the assessee assessable under section 23 of the Income-tax Act. The assessee also has taken objection to the reopening of the assessment under section 148 but that is not very relevant to me in this appeal. 3. The assessee then appealed to the Commissioner (Appeals). He upheld the validity of the reopening of the assessment. However, he reduced the addition to the tune of Rs. 35,152 only. I shall refer to some more facts at this stage. There was an agreement entered into between the assessee and AirIndiaon18-2-1976, which read as follows: "I am happy to confirm that to compensate you for the low rental of Rs. 4,000 per month which is being charged for the entire property, our Headquarters have agreed to provide you with three round trip tickets Delhi/Amsterdam/Delhi per calendar year over the service of AirIndia's subsidiary Company Air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccountant Member did not agree with this view. Placing reliance upon the language used in section 23 of the Income-tax Act, he held that the entire value of the tickets must be taken as the additional rent provided by way of air tickets and the entire sum of Rs. 35,152 should be taken and not the discounted value of the tickets. He was of the opinion that the theory of perquisite is not available in computing the income from property and that was peculiar only to section 17 of the Income-tax Act dealing with assessment of income from salary. He was also of the opinion that if an assessee received by letting out his property rent both in cash and in kind, the entire value received in kind should be added and therefore the theory of discounting did not arise. Thus, the difference of opinion, between the two Members was not whether the rent received in kind should be assessed to tax or not under section 23 of the Income-tax Act, but as to the value to be put upon the rent received in kind. Both the Members have interestingly in this case drafted what according to them was the difference of opinion. The learned Accountant Member had stated the difference of opinion in the following ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, and the annual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable shall be taken to be the annual value of the property. Thus clause (b) makes it compulsory in a way to determine the annual value of the property under clause (a) also. The annual value must be determined first under clause (a) and then compare it with clause (b) that is actual rent received or receivable and find out which of the two was higher and adopt that higher value. This was not done in this case presumably on the impression that the actual rent received would be in excess of the sum referred to in clause (a). Since the sum for which the property might reasonably be expected to let from year to year has to be arrived at as stated in clause (a) and since clause (a) must include the rent received in kind also the value of the tickets should be converted into that sum, which would be capable of being received or receivable. The same idea is conveyed by clause (b) also when it refers to the actual rent received or receivable. The expression "received or receivable" also refers to the rent capable of being received ..... X X X X Extracts X X X X X X X X Extracts X X X X
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