9911796707
TMI Blog1989 (10) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... residence, was the Tribunal right in law in holding that the entire expenditure incurred by the assessee for the maintenance of the buildings given for the residence of their employees and the depreciation thereon can be taken into account for the purpose of disallowance under section 40 (a) (v) of the Income -tax Act ?" The respondent in this batch of cases is the Revenue. We are concerned with the assessment years 1970-71, 1971-72, 1976-77, 1977-78 and 1973-74. We heard counsel. The short question that arises for consideration is the interpretation to be placed on section 40(a)(v) and section 40A(5)(b) of the Income-tax Act, 1961. Following the Revenue's view rendered in the earlier assessments of the assessee, the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head 'Profits and gains of business or profession', (a) in the case of any assessee- ... (v) any expenditure which results directly or indirectly in the provision of any benefit or amenity or perquisite, whether convertible into money or not, to an employee (including any sum paid by the, assessee in respect of any obligation which but for such payment would have been payable by such employee) or any expenditure or allowance in respect of any assets of the assessee used by such employee either wholly or partly for his own purposes or benefit, to the extent such expenditure or allowance exceeds on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sub-clause (ii) of clause (a) of section 40A(5) include within their purview also expenditure incurred directly or indirectly in respect of any asset of the assessee used by an employee either wholly or partly for his own purposes or benefit for being considered for the application of that provision. All that is required in respect of this part of this provision is that the assets of the assessee should have been used either wholly, or partly by the employees for their own purposes or benefit. No qualification Is made to the effect that the asset should have been used by the employee freely without payment of any consideration. The decision of the Kerala High Court in the assessee's own case for the assessment year 1974-75 clearly defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its employees free of rent, that this is not factually correct and that the assessee was collecting rent from its employees at the municipal value and, therefore, the decision rendered by this court in the earlier proceeding in Forbes, Ewart and Figgis (P.) Ltd.'s case [1982] 138 ITR 1 [FB] will not apply. We will proceed on the basis, as the Tribunal has done, that the assessee was charging rent on the basis of municipal valuation. We will also proceed, as the Tribunal has done, that the municipal value would represent the fair market rent in respect of the property. Even so, a question arises, whether collection of rent for the buildings occupied by the employees of the assessee is in any way relevant to dissuade the assessing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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