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TMI Blog1984 (3) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 ('the Act') to show cause that why reassessment should not be made on the assessee being the income escaped to be assessed in the original assessment. In compliance with the notice the assessee filed the return and therein pleaded that there was no benefit or perquisite assessable in the hands of the assessee and in particular, there should be no addition on account of personal use of the cars by the assessee in view of the fact that in the case of the company for the assessment year 1968-69, such perquisites were added under section 40(c) of the Act vide order dated 25-9-1971 and the amount relating to the assessee was at Rs. 9,097 which was included in the company's assessment. Accordingly, the ITO held that the contention of the representative of the assessee that there was no benefit or perquisite assessable could not be accepted and that similar addition for the assessment year 1970-71 in the assessee's own case was confirmed in appeal. On these reasons he made addition for a sum of Rs. 9,097 for the personal use of the cars by the assessee of the company. Reliance was placed on the decision in Rendell v. Went (Inspector of Taxes) [1965] 58 ITR 73 (HL). 3. In appeal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that the Commissioner (Appeals) ought to have appreciated that the benefit of perquisite assessable under the Act should be a benefit or perquisite legally permissible to be enjoyed by the assessee and in this case the assessee was not authorised to use the cars and, therefore, the use of the cars was unauthorised, hence, no question arises of assessment of value of perquisite as income of the assessee. Reliance is placed on the decisions in A.R. Adaikappa Chettiar's case and M.M. Metha v. CIT [1979] 117 ITR 362 (Cal.) On the other hand, Shri K. Venkataraman, the learned departmental representative, contends that section 2(24)(iv) of the Act defines 'income' and section 17(2) of the Act defines 'perquisite'. These two sections read together leave no doubt that the impugned amount of perquisite representing the use of the cars by the director of the company, which is for personal use by the director, is assessable in the income of the assessee. He further contends that there is no proof that the assessee is using the cars as unauthorised in view of the fact that the company is not opposed to the assessee, therefore, the presumption is there that the use of the car by the director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was held that the reopening of the partners' assessments was invalid in law. Further, as in the instant cases it was found that the unauthorised user was by the assessee as managing agents and not as directors, it was held that the provisions of section 2(6C)(iii) cannot be brought in aid. Their Lordships further observed that the benefit or advantage which might have been taken by a director or other person from a company without any claim of right has to be repaid or returned to the company if the company discovers the unauthorised taking and seeks to enforce its restitution. In the circumstances, the words 'benefit or perquisite' occurring in section 2(6C)(iii) can only take in those authorised by the company and it is not possible to treat both authorised and unauthorised benefits alike. In the case of the assessee the facts are quite distinguishable and the Commissioner (Appeals) has rightly distinguished these holding further that the case of A. R. Adaikappa Chettiar is not applicable to the facts of the case of the assessee. In the case of the assessee the director and managing director used the cars of the assessee for years together and the company did not oppose its use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid ; " Section 17(2) defines 'perquisite' and says that perquisite includes : " (i) the value of rent-free accommodation provided to the assessee by his employer ; (ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer ; (iii) the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases-- (a) by a company to an employee who is a director thereof ; (b) by a company to an employee being a person who has a substantial interest in the company ; (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 ; " Rule 3 of the Income-tax Rules, 1962 ('the Rules') says that the value of perquisite in respect of motor-car is to be computed in the manner mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case since it has been assessed accordingly by the authorities below, hence, we hold that they are justified in doing so and thereby confirm the impugned order on the issue. Before we part we want to mention that the case relied upon by the assessee in M.M. Metha's case is also of no help to the assessee being distinguishable and the admitted facts as we have mentioned above it is not rebutted by the learned counsel of the assessee when the learned departmental representative stated at the Bar that the cars of the company are authorised to be used by its directors and managing directors and reliance was placed on the articles and objects of the association of the company. No doubt, the learned counsel for the assessee accepted it stating therein that there is no proof brought on record by the department to prove that in the case of the assessee there was authorisation by the company and if circumstances are there to prove it, as we have mentioned above, then it cannot be said that the onus is not discharged by the department because contractual obligation can be proved by producing contract of service between the employer (company) and the employee (director, ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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