9911796707
TMI Blog2007 (11) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had borne tax of Rs. 9,95,502 when no evidence in this regard was placed on record while filing return of income as also during the course of assessment proceedings. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not appreciating that there is no provision under the Act to allow deduction of hypothetical tax from income chargeable under the head 'salary'." 3. Brief facts are that the assessee is an individual deriving income from salary and filed his return of income declaring total income at Rs. 1,87,45,450. The case was re-opened and in the course of assessment proceedings, the Assessing Officer found that the employer had withhold a sum of Rs. 9,95,502 towards hypothetical tax out of salary payable to the assessee. It was also noted that the same had not been included by the assessee in his income. The assessee clarified to the Assessing Officer that this sum was withheld on account of policy of the employer wherein it was ensured that the employee deputed outside home country was neither at an advantage nor at a disadvantage. The Assessing Officer, not being satisfied the contentions of the assessee, made the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Living expenses (Estimated) at Rs. 1,000 per day Rs. 1,83,000 Rs. 6,81,565 For the second half, the value of accommodation perquisite was taken at Rs. 2,25,000. The Assessing Officer, not being satisfied with the manner adopted by the assessee, asked the assessee to explain the same. The assessee submitted that as per rule 3 (a)( iii)(A) of Income-tax Rules, 1962, the perquisite in respect of rent-free accommodation was to be computed period-wise where the assessee had occupied more than one accommodation during the previous year. The Assessing Officer, however, rejected this contention of the assessee and held that there was no provision in rule 3(a)( iii)(A) for dividing occupied days into different periods for the reason that different types of accommodations were provided during the year and he, accordingly, worked out the perquisite at Rs. 19,53,886 comprising of Rs. 2,75,000 of rent paid in the second half of the year and 2-3rd of total room rent of hotel at Rs. 16,77,886 and made an addition of Rs. 9,96,321, being the excess value of accommodation perquisite over the one declared by the assessee. In the appellate proceedings before ld. CIT(A), the assessee reiterated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.V. Graafeiland (supra ) wherein in almost similar facts, the Tribunal had held that hotel bill could not be the basis for determining the value of perquisite on account of rent-free accommodation in his hand and rent paid for flat given to the employee was to be taken as basis for determining the value of perquisite for the period of stay in the hotel. Thereafter, the ld. Counsel alternatively contended that the perquisite value was to be computed separately for each period when hotel accommodation and flat respectively were provided to the assessee. The ld. Counsel also submitted that salary for the purpose of computing the accommodation perquisite had been defined in the Explanation 1 below rule 3(a)(iii ), hence, perquisites were not liable to be included therein in computing the value of perquisite for accommodation. 13. The learned D.R., on the other hand, placed strong reliance on the orders of revenue authorities. 14. We have considered the submissions made by both sides, material on record and orders of authorities below. It is an admitted position that the assessee has remained in India throughout the previous year. It is also not in dispute that for the first 6 month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fair rental value on the basis of rent which similar accommodation would realize in the same locality or municipal valuation in respect of accommodation, whichever is higher. In such cases the municipal valuation may not be there, but eventually, the rent for similar accommodation would always be higher from the municipal valuation in such cases, hence, the actual rent paid should be taken as the fair rental value and the perquisite value in respect of hotel accommodation should be worked out by applying provisos 1 and 2 accordingly. We also find force in the contention of the assessee that Explanation 1 provides for what should be included in the term 'salary' for the purpose of computing the value of perquisite, hence, we direct to the Assessing Officer to compute the perquisite value by taking salary for the relevant period according to the provisions of Explanation 1 to rule 3(a)(iii )(A) of the Act. Thus, this issue is restored for the computation of value of perquisite in respect of residential accommodation to the file of Assessing Officer to be decided in the light of our directions given hereinabove. In the result, ground Nos. 2 and 3 stand allowed for statistical purp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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