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TMI Blog1983 (9) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... d 'Salary' for the reason that the assessee did not make use of the same during the previous year ? " The assessee is an individual deriving income from a steel re-rolling mill at Kamptee. The assessment year to which the question relates is the year 1964-65 relevant to the previous year ended on March 31, 1964. Besides deriving income from property, the assessee is also a managing director of a company known as M/s. Bawa Iron & Steel Works Ltd. (hereinafter referred to as " the company "), which had its registered office at Sonepat. The assessee received a remuneration of Rs. 9,750 from the company. The company provided the assessee with a rent-free house, car and a telephone and a few other amenities which were not specified. In respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal observed that taxing of a perquisite is taxing a notional income and if notional income is to be taxed, the legal fiction must be carried to the logical end. If notional income is to result, there must be performance of that part of the contract which the employee has to perform normally using the accommodation provided, otherwise the notional income does not come into being. The Tribunal held the view that the notional income would come into being only if the assessee derived benefit out of the perquisites and not otherwise. It accordingly deleted the addition of Rs. 2,000. It is necessary to notice the provisions of ss. 15 and 17 of the Act. Section 15 reads as follows: "The following income shall be chargeable to income-tax und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of rent-free accommodation. On facts it is found that the rent-free accommodation was provided to the assessee by his employer. The only question is that the assessee had not utilised the rent-free accommodation provided to him. The statute has used the word " provided " which means making it available for the use of the assessee. There may be circumstances under which the employee may not make use of the rent-free accommodation provided to the assessee. In our opinion, unless the assessee forgoes his right of the provision of rent-free accommodation provided to the assessee by his employer or waives his right before the income accrues, the notional income has to be brought to charge as a perquisite equivalent to the value of rent-fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other income is forgone before it accrues, it cannot be taxed at all because the act of surrender prevents the accrual of income. In CIT v. Mehar Singh Sampuran Singh Chawla [1973] 90 ITR 219, a Bench of this court held that the salary, commission and bonus had not accrued to the assessee during the -accounting year and were not taxable income in his hands. The questions for determination in such cases were, when did salary, commission and bonus accrue to the assessee and whether the assessee gave up his right to claim them from the company prior to those amounts crystallising into a debt due from the company to the assessee and becoming recoverable by him as such from the company. In CIT v. Bachubhai Nagindas Shah [1976] 104 ITR 551 (Guj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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