Employee flat repairs not a perquisite when spent only for upkeep and no separate benefit was shown.

Repairs to leased flats occupied by employees were not treated as a separate benefit, amenity or perquisite under section 40(c)(iii) where the assessee incurred the expenditure to keep the flats in livable condition and to meet its ordinary maintenance obligation. The court noted that the repairs did not enhance the value of the flats and there was no evidence of any distinct advantage conferred on the employees. On those facts, the repair expenditure was held outside the disallowance provision and was not disallowable as a perquisite to employees.

---

---

Issues: Whether expenditure incurred by the assessee on repairs to flats occupied by its employees constituted a benefit, amenity or perquisite to the employees within the meaning of section 40(c)(iii) of the Income-tax Act, 1961.

Analysis: The flats were taken on lease by the assessee and let out to employees. The expenditure was incurred to keep the flats in a good livable condition and to discharge the assessee's obligation to maintain them in the ordinary course. There was no evidence that the repairs enhanced the value of the flats. On these facts, the repairs were not shown to confer any separate benefit, amenity or perquisite on the employees.

Conclusion: The expenditure on repairs did not fall within section 40(c)(iii) and was not disallowable as a benefit, amenity or perquisite to the employees. The question was answered in the negative, in favour of the assessee.

---