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TMI Blog2008 (4) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant and hence the addition made on this count ought to be deleted." 3. Facts of the case, in brief, are that the assessee, an individual, was employed as Vice-President with M/s. Hutchison Max Telecom (P.) Ltd. during the previous year relevant to the assessment year under appeal. The Assessing Officer perused the Certificate of Deduction of Tax at Source in Form No. 16 and Form No. 12BA filed by the assessee along with his return of income and noticed that the assessee s employer had provided rent-free residential accommodation to the assessee in respect of which the assessee had taken perquisite value at Rs. 2,71,747 and consequently added the same to his salary. The Assessing Officer called for the details and noticed that the assessee s employer had entered into two agreements, both of which were dated 5-5-2003. By first agreement described as Leave and License Agreement executed between the assessee s employer, namely, M/s. Hutchison Max Telecom (P.) Ltd. and M/s. Sterling and Wilson Property Developers (P.) Ltd., the assessee s employer had hired flat No. 1101 admeasuring 2150 sq. ft. at 11th floor in a building known as Sterling Sea Face at Dr. Annie Besant Road, W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. While making the assessment, the Assessing Officer applied rule 3(1) of Income-tax Rules for the valuation of residential accommodation covered by the Leave and License Agreement and rule 3(8) of the Income-tax Rules for valuation of the amenities provided by the employer to the assessee under the Amenities Agreement. As regards the valuation of the residential accommodation, the Assessing Officer noticed that the actual amount of rental payment was Rs. 15,000 per month or Rs. 1,80,000 annually while 10 per cent of the salary of the assessee was only Rs. 2,71,747 and therefore took the lower of the two and accordingly valued the residential accommodation taken on lease (rent) by the employer at Rs. 1,80,000. As regards the valuation of the amenities provided by the employer, the Assessing Officer invoked rule 3(8) of the Income-tax Rules as applicable at the relevant point of time. Rule 3(8) provided that the value of any other benefit or amenity, service, right or privilege provided by the employer shall be determined on the basis of cost to the employer under an arm s length transaction as reduced by the employees contribution if any. . . ." According to the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under which the perquisite value should have been worked out. He submitted that rule 3(8) of the IT Rules would come into play in a case where rule 3(1) was not attracted. According to him, all the payments in respect of the residential accommodation provided to an employee were required to be taken into account for the purpose of valuation of perquisite in the form of residential accommodation under rule 3(1) alone and not under rule 3(8). It was also his case that all the payments made for effective enjoyment of residential accommodation under both the Agreements were in the nature of rent and, therefore, ought to have been considered under rule 3(1) alone. He further contended that the Amenities Agreement sought to provide certain services like plastering, painting, house-keeping, car parking space etc. for effective enjoyment of the property and, therefore, the payments made in pursuance thereof would be in the nature of rent and consequently liable to be considered for valuation as a perquisite under rule 3(1). 7. In reply, the ld. DR supported the order passed by the Assessing Officer and the CIT(A) in this behalf. 8. We have heard the parties. Rule 3 of the IT Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich can be taken into account for the purpose of valuation of residential accommodation under rule 3(1). Any payment which is not "lease rental" cannot enter into computation under rule 3(1) of the Income-tax Rules. The term "rent" signifies a return made by a tenant or occupant of land or corporeal hereditaments to the owner for the possession and use thereof; the pecuniary sum agreed upon between a tenant and his landlord and paid at fixed intervals by the tenant to the landlord for the use of land or its appendages. Clause 1 of the Explanation to section 194-I of the Income-tax Act, as it stood at the relevant point of time, defined rent as any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building (including factory building), together with furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payee. According to section 105 of the Transfer of Property Act, rent is the price paid or promised by the transferee to the transferor in lieu of grant of lease of any immovable property by the transferor. Thus rent is a monetary compensation pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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