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TMI Blog2002 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Reference No. 34, of 1983, the following order was passed: "Learned counsel appearing on behalf of the Revenue states that the question raised for the assessment year 1975-76 in regard to perquisite value of expenditures incurred on the maintenance of rent-free accommodation and on the servants provided by the assessee-company to its directors needed consideration and, thus, these questions are not covered by any earlier decision of this court." Thus, the matter has now been placed before this Bench. A perusal of the paper book shows that in respect of the assessment year 1975-76, the following two questions have been referred by the Tribunal: "(x) Whether, on the facts and in the circumstances of the case, the Tribunal wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building provided as rent-free accommodation to one of the directors by the assessee are directly relatable to a perquisite and had to be taken into consideration while determining the amount admissible under section 40A(5) of the Act. On behalf of the assessee, it has been pleaded that the view taken by the Tribunal is in strict conformity with the provisions of law. A perusal of the order passed by the Tribunal shows that the decision was based on the view taken by the Kerala High Court in the case of Travancore Tea Estates Co. Ltd. [1980] 122 ITR 557. It deserves mention that this view of the Division Bench was expressly overruled by a Full Bench of the Kerala High Court in CIT v. Forbes, Ewart and Figgis (P.) Ltd. [1982] 138 ITR 1. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c)(iii). Suppose, in another case, a house owned by the assessee (furnished and maintained by the assessee) is similarly placed in the possession and enjoyment of the employee and the assessee took on rent an air-conditioner and installed it in the said house, the whole expenditure would have been subject to the ceiling in section 40(c)(iii). Now, the question is whether Parliament intended differently when it put in section 40(a)(v) in the place of section 40(c)(iii). In this connection, it may be noted that section 40(a)(v) was in force from April 1, 1969, to March 31, 1972, only and that section 40A(5) which came into force with effect from April 1, 1972, in place of section 40(a)(v) does not admit of any such controversy in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e perquisite made available to the employees ... and directed the disallowance under section 40(a)(v) of the Act...". Mr. Sawhney contends that the wages paid to the servants constitute a perquisite within the meaning of section 40A(5) and, thus, could not be excluded while computing the amount admissible under section 40A(5). On the other hand, Mr. Jain contends that in view of the circular, the view taken by the Tribunal was correct in law. It is the admitted position that the circular dated January 12, 1970, issued by the Central Board of Direct Taxes is regarding the valuation of perquisites under section 17(2). Thus, it is not relevant for the purposes of section 40A(5) of the Act. The method of calculating the value of the perqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the capital employed and the average value of the assets and liabilities during the year should be adopted instead of their value as on the first day of the previous year?" So far as question No. (viii) is concerned, it has been considered by the Bench (G.C. Garg and N.K. Agrawal JJ.) in I.T.R. No. 33 of 1983. Vide order dated November 30, 1998, the Bench followed the decision in Porritts and Spencer (Asia) Ltd. v. CIT [1989] 180 ITR 211, and answered the question in favour of the assessee. We find no reason to take a different view. So far as question No. (ix) is concerned, Mr. Sawhney states that this question does not arise out of the order of the Tribunal. Thus, it is returned unanswered. So far as question No. (xii) is conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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