Fair rent under rent control law governs valuation of rent-free accommodation as a taxable perquisite.

Rent-free residential accommodation was to be valued for tax purposes by reference to the fair or standard rent fixed under the applicable rent control law, where that determination was accepted on the facts. The Tribunal had treated the local authority's fair rent for similar premises as the proper basis, and the HC held that this valuation was a finding of fact not open to challenge in the reference. The standard rent principle was consistent with computing the hypothetical rent of the perquisite. The value of the accommodation was therefore rightly restricted to the rent fixed under the rent control law, in favour of the assessee.

---

---

Issues: Whether the value of the perquisite arising from rent-free residential accommodation had to be restricted to the rent fixed by the local authority under section 9 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972.

Analysis: The accommodation was valued for income-tax purposes by reference to rent control principles. The Tribunal relied on the local authority's determination of fair rent for similar premises and treated that figure as the proper basis for valuing the rent-free accommodation. The Court accepted that, on the facts found, the fair market rent fixed by the authority represented the relevant rent basis and that the Tribunal's valuation was a finding of fact not open to challenge in the reference. The Court also noted that the standard rent principle was consistent with the approach to determining hypothetical rent for tax purposes.

Conclusion: The value of the rent-free accommodation was rightly limited to the rent fixed by the local authority, and the question was answered in the affirmative in favour of the assessee.

Final Conclusion: The reference was disposed of by accepting the assessee's contention that the perquisite value had to be computed on the basis of the rent fixed under the rent control law.

Ratio Decidendi: Where fair rent or standard rent is fixed under the applicable rent control law and the determination is accepted on the facts, that rent forms the proper basis for valuing rent-free residential accommodation as a taxable perquisite.

---