9911796707
TMI Blog1981 (1) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... with a residential accommodation by the mills at a rent of Rs. 25 per month by virtue of his being in its employment. Since then he continued to be in the employment of the Mills and continued to occupy the residential accommodation at the same rate. He retired in 1976. For the first time in the assessment year 1967-68 the ITO acting under the provisions of s. 17(2)(ii) of the Act found that the accommodation provided to the assessee by his employer was on a concessional rent. He, accordingly, charged to tax the aggregate value of the perquisite at 2 1/2 % of the assessee's salary from Birla Mills and after deducting Rs. 300 stated to have been paid as rent by the assessee to the employer, the balance of Rs. 7,200 was added in the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of the Rent Act they were of the view that those provisions did not apply. Disagreeing with the AAC, they held that the provisions of the Rent Act were wholly inapplicable in arriving at the perquisite value of the accommodation occupied by the assessee. They agreed with the ITO that the perquisite value of the accommodation had to be determined in accordance with s. 17(2)(a) of the Act and r. 3(b) of the Rules. At the instance of the assessee, the Tribunal has referred the following question to us for our opinion: " Whether, in view of the provisions of section 17(2), read with rule 3(a)(ii) of the Income-tax Rules, 1962, and the definition of `fair rental value' in Explanation (1)(ii) to rule 3(a) and (b) of the Income-tax Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the position, of the executive president of the mills. As an employee of the mills he was occupying the house owned by it. It seems to us that his occupation can properly be described as a service occupation. He was a service occupier or a licensee. A service occupation is only a particular kind of licence whereby a servant is required to live in the house in order to do his work better. The assessee's residence in the mills' premises was for the better performance of his duties. The creation of a tenancy cannot be inferred from the facts and circumstances of the case. We think the ITO was right in holding that it was not a case of landlord and tenant to which the Rent Act applied. It is true that the premises were given to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to him to answer. It appears to us that for the better performance of his duties he occupied the premises as part of his contract of service and not as a tenant. We cannot hold that a tenancy existed in favour of the assessee. In Torbett v. Faulkner [1952] 2 TLR 659, 660 (CA) Denning L.J. said: ".A service occupation is, in truth, only one form of licence. It is particular kind of licence whereby a servant is required to live in the house in order to do his work better. But it is now settled that there are other kinds of licences which a servant may have. A servant may in some circumstances be a licensee even though he is not required to live in the house, but is only permitted to do so because of its convenience for his work-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the servant. He merely gave him a personal privilege with no interest in the land. That in such like cases the officer' occupation is that of a licensee is exemplified by the decision of the Supreme Court in B. M. Lall v. Dunlop Rubber Co. (India) Ltd. [1968] 1 SCR 23; AIR 1968 SC 175. The Supreme Court followed Denning L. J. The provision of s. 17(2) and r. 3 fully apply to the case of the assessee. He was enjoying the accommodation of the employer at a concessional rent. This appears to be a term of his service. The perquisite value of the accommodation occupied by the assessee was legally and correctly determined by the ITO. He rightly held that the provisions of the I.T. Act and the Rules framed thereunder ought to be applied in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmula, to determine the value of a perquisite once it is held that the premises were given at a concessional rent by the master to the servant. Where there is a relationship of landlord and tenant different considerations may apply. It is unnecessary to rule on that today. In the present case we agree with the ITO and the Tribunal that it is a case of concessional rent to which s. 17 and r. 3 apply. For these reasons, we answer the question referred to us as follows : 1. The value of the residential accommodation was correctly determined by the Tribunal under the provisions of s. 17(2) of the I.T. Act, 1961, read with r. 3(a)(ii) of the I.T. Rules, 1962. 2. The Delhi Rent Control Act, 1958, has no application to the case of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
