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TMI Blog1986 (1) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... e and that, therefore, the question of adding anything by way of perquisite did not arise. The ITO did not accept the above contention of the assessee and he pointed out that the entire loan of Rs. 3,03,000 had been advanced by the employer bank to the assessee under Banking Housing Loan Scheme contained in the staff Circular No. 400 dt. 19th May, 1973 and that under the aforesaid scheme of the bank only the permanent employees of the bank were eligible for obtaining the loan and that even though the loan could be available also in the name of the spouse yet it was to the advanced to both jointly and severally and the loan was given to the employee, as as he was in employment with the bank and that such a loan could not have been given to him, if he had not been an employee of the bank or to his wife, if she were not in employment. The basic connection of the employer and employee must subsists before the bank granted the loan and, therefore, granting the loan to the employee at the concessional rate would amount to providing perquisite to the employee, because it amounted to a benefit of raising loan at a concessional rate. 3. The assessee s contention that there was no conces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Instant case the employer bank has charged interest though in the opinion of the ITO, it was the concessional rate of interest. Since the addition made by the ITO on account of perquisite under s. 17(2)(iii) is based on the market rate of interest and not on the cost to the bank the addition made by the ITO in respect of perquisite cannot be upheld." 6. The Revenue is in appeal against the aforesaid order of the ld. AAC and it is urged by the ld. Departmental representative that the granting of loan @ 4 per cent and 12.5 per cent rate of interest was without doubt a concessional rate, because, at the above rates, the bank never advanced loans to its customers. The loans at the above rates of interest were advanced to the assessee only because he was an employee of the bank and as such the loan in question had to be regarded as given at concessional rate. For finding out as to whether or not a loan was given at concessional rate of interest, one had to ask whether the other customers would be given loans at the same interest, if not, the loan in question at the above rates would be concession loan to the assessee. The ld. AAC had asked a wrong question, while determining as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n careful consideration to the facts of the case and rival submission. Clauses (iii) of sub-s. (2) of s. 17 of the IT Act, 1961 reads, so far so its relevant for our purpose, as below: "perquisite" includes (iii) the value of any benefit or amenity grated or provided free of cost or at concessional rate in any of the following cases (a) x x x (b) x x x (c) by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub-clause do not apply and whose income under the head "Salaries". Exclusive of the value of all benefits or amenities not provided for by way of monetary payment exceeds eighteen thousand rupees. The assessee s salary in terms of the aforesaid cl. (c) was Rs. 43,290 in the accounting period corresponding to 1978-79 when the loan in question was given by the Punjab Sind Bank to the assessee. His salary was thus above Rs. 18,000. Punjab Sind Bank is the employer of the assessee. Therefore, if it can be shown that a benefit or amenity has been granted by the said bank of the assessee and that the said benefit or amenity is free of cost or is at confe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyer and such benefit would be taxable in terms of s. 17(2)(iii). 10. The approach of the ld. AAC to determine whether or not the loan advanced to the assessee @ 4 per cent and 12. 5 per cent is at concessional rate was in our opinion wrong because he compared the rate of advancing of the loan with the cost of the said loan to the bank. The ld. AAC did not even ascertain the cost of the loan to the bank and proceeded on the footing that the cost was not lower than 4 per cent and as such no concession was involved. Apart from the above lacuna in the approach of the ld. AAC, the test evolved by her, namely, the comparison of the cost of the loan with the rate at which the loan was advanced by the bank to the assessee is, in our opinion, erroneous. Whether or not there was concessional rate of interest has to be determined with reference to the interest chargeable by the bank from its normal customers, and not with reference to its cost of raising the amount which was given by way of loan. The loan in question was given by the bank @ 4 per cent to the extent of Rs. 2,50,000 and Prima facie the aforesaid rate is concessional, to what extent it is however, concessional should have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee s total income. 13. The contention of the assessee was that there was amendment in the law by the Taxation (Amendment) Act, 1984 and that later on, by the Finance Act, 1985, the said amendment was revoked retrospectively, and that, therefore, it should be presumed to be the intention of the legislature that the advancing of loans at confessional rate of interest should not be treated as perquisite is not acceptable to us. The decisions of the Hon ble Madras High Court, on which we are placing reliance (it may be noted that no contrary decision of any Other High Court had been brought to our attention) were given with reference to the language of cl. (iii) of sub-s. 2 of s. 17 of the IT Act, 1961 and when the matter is covered squarely by the language of the said cl. (iii), we see no reason as to why we should not give effect to the plain language of such section which is unambiguous and we should change our instance merely because the amendment brought in by the Taxation Law (Amendment) Act, 1984 had subsequently been withdrawn by Finance Act, 1985. The effect of the aforesaid amendments may be relevant for consideration in respect of asst. yrs. 1984-85 and 1985-86 but not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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