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TMI Blog1986 (9) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 and Rs. 1,000, respectively. During the assessment year under appeal, he also paid the subscription of Rs. 1,740. The only question before us is whether the ITO is justified in treating Rs. 6,000 towards entrance fees and Rs. 1,740 towards club's subscription as a perquisite within the meaning of section 17(2)(iii) of the Income-tax Act, 1961 (' the Act '). 3. Before the ITO, the assessee claimed exemption under section 10(14) of the Act, which governs any special allowance or benefit or other perquisites within the meaning of section 17(2) if such allowance is granted wholly, necessarily and exclusively for the performance of duties of the employee. The ITO rejected the contention of the assessee holding that these sums were perquisite within the meaning of section 17(2)(iii). 4. On appeal, the Commissioner (Appeals) by relying on several Tribunal decisions and principally on the ratio decided by the Bombay Bench ' C ' in the case of Shambhu V. Sista v. Fifth ITO [1983] 5 ITD 445 held that the assessee was Chief Manager of the bank and by virtue of his position, he would necessarily have to see the promotion of bank business through the medium of these clubs. Therefore, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides as under : " ' Perquisite ' includes--- (i) the value of rent-free accommodation provided to the assessee by his employer ; (ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer ; (iii) the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases--- (a) by a company to an employee who is a director thereof ; (b) by a company to an employee being a person who has a substantial interest in the company ; (c) by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub-clause do not apply and whose income under the head ' salaries ', exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds eighteen thousand rupees ; (iv) any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee ; and " It is clear from the section itself that the word ' perquisite ' includes the value of any benefit or amenity granted or provided free of cost or at concessional rate by the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould join a club suited to the purpose of fostering local contacts and the bank paid the annual subscription of pound 21. The appellant was already a member of another club at an annual subscription of pound 12 12s. but some personal advantage from this membership was admitted and the bank paid only one-half of the subscription. The amount paid by the bank was assessed on the assessee under Schedule E of (UK) of the Income-tax Act, 1952. It was also not disputed that the payments formed part of the emoluments of the office or employment, their Lordships had held that no deduction under paragraph 7 can be allowed. 11. It is pertinent to mention here that in that case, on appointment as manager of the branch of the bank, it was essential that he must foster local contacts and for that he should join the club or clubs best suited for that purpose. Membership of such clubs, was in almost every case, passed from the manager to the succeeding manager as a matter of course. If a prospective manager refused to join a club, his refusal would not be accepted without very good reason, but would necessarily mean that he would lose the appointment. Club membership is virtually a condition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank was benefited by his membership in these two clubs. Therefore, we cannot agree with the contention of the learned counsel for the assessee that the membership of the assessee to these clubs was in any way beneficial to the business of the bank or he has paid subscription and entrance fees, it was incurred for the performance of his duties as a bank manager. 13. The learned counsel for the assessee placed reliance on the ratio in the case of Shambhu V. Sista and it was argued that in that case, the Tribunal had concluded that there was no evidence on record to suggest that the assessee had become a life member for any purpose other than furtherance of the company's business. Therefore, in view of that, the entrance fees and subscriptions should not be taken as perquisite in the hands of the assessee. So far as the principle of law laid down in the case of Shambhu V. Sista is concerned, the facts of that case are different from the facts of the present case. In that case, the assessee was already member of another club for his own amusement and he had become a member of second club during the continuance of the membership in the first club. The nature of the job of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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