Government accommodation valuation applies to employees of a Government-controlled body, not the slab for other employers.

Residential accommodation provided by a Government-controlled body to employees retaining Government status is valued under the Government accommodation formula in Rule 3(1), Table I, where the body is constituted under statute, controlled by Government, and the premises are owned by the State Governments. The Board was treated as a Government organisation, so the slab applicable to other employers owning or leasing accommodation did not apply. The perquisite value had to be computed on the licence fee determined under the Government rules. On that basis, the Revenue's challenge failed and the section 201 demand, together with interest under section 201(1A), could not be sustained.

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Issues: (i) Whether Bhakra Beas Management Board was to be treated as a Government organisation for the purpose of valuing the perquisite arising from residential accommodation provided to its employees; (ii) whether the value of such accommodation was to be computed under the Government accommodation slab in Rule 3(1) of the Income-tax Rules, 1962 or under the slab applicable to other employers.

Issue (i): Whether Bhakra Beas Management Board was to be treated as a Government organisation for the purpose of valuing the perquisite arising from residential accommodation provided to its employees.

Analysis: The Board was constituted under the Punjab Re-organization Act, 1966, was under the control of the Central Government, was funded by the successor States in prescribed proportions, and its accounts were subject to audit by the Comptroller and Auditor General of India. The employees working in the Board retained the status of Government or State employees, and the accommodation in question belonged to the partner States and not to the Board. On these features, the Board could not be treated as an independent non-Government employer for the purpose of perquisite valuation.

Conclusion: The Board was held to be a Government organisation.

Issue (ii): Whether the value of such accommodation was to be computed under the Government accommodation slab in Rule 3(1) of the Income-tax Rules, 1962 or under the slab applicable to other employers.

Analysis: Rule 3(1), Table I, distinguishes between accommodation provided by the Central or State Government, or by a body or undertaking under their control on deputation, and accommodation provided by any other employer owning or leasing the premises. Since the accommodation was owned by the State Governments, the employees were serving under a Government-controlled body, and licence fee had already been determined under the Punjab Civil Services Rules, the conditions for the Government accommodation slab were satisfied. The provisions applicable to an employer owning or leasing the accommodation were not attracted.

Conclusion: The perquisite value had to be computed on the basis of the licence fee determined under the Government rules, not under the slab for other employers.

Final Conclusion: The Revenue's challenge to the valuation of the residential accommodation failed, and the demand under section 201 and interest under section 201(1A) could not be sustained on the basis adopted by the Assessing Officer.

Ratio Decidendi: For residential accommodation provided by a Government-controlled body to employees retaining Government status, the perquisite is to be valued under the Government accommodation formula in Rule 3(1), Table I, and not under the provision meant for other employers owning or leasing the premises.

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