Employer house-building loan interest was held not taxable as a perquisite under the binding Board instruction in force.

Concessional interest on an employer-provided house-building loan was treated as a non-taxable perquisite because the assessment and first appellate proceedings were governed by the Board's instruction dated 8-8-1977, which stated that low-interest company loans for house building would not constitute a perquisite. The relevant instruction issued under section 119 was binding on subordinate tax , and the later instruction dated 7-12-1983 applied only prospectively. On that basis, the concessional loan interest could not be taxed as a perquisite.

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Issues: Whether the concessional interest on a house building loan given by the employer constituted a perquisite in the hands of the employee under section 17(2)(iii)(c) of the Income-tax Act, 1961, and whether the binding Board instruction in force at the time of assessment protected the assessee.

Analysis: The assessment was made and the first appellate order was passed while the Board's instruction dated 8-8-1977 remained in force. That instruction stated that loans given by a company for house building at a low rate of interest would not constitute a perquisite. Instructions issued by the Board under section 119 of the Income-tax Act, 1961 were binding on the authorities subordinate to it. The later instruction dated 7-12-1983 operated only prospectively from its date and did not affect the proceedings already concluded. In these circumstances, the concessional interest could not be taxed as a perquisite.

Conclusion: The concessional loan interest was not taxable as a perquisite and the assessee succeeded.

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