1986 (8) TMI 104 - AT - Income Tax

Employer's Concessional Housing Loan Not Taxable

Fifteenth Income-Tax Officer. Versus PJ. Anthony.

Fifteenth Income-Tax Officer. Versus PJ. Anthony. - ITD 019, 381, TTJ 026, 6 Issues:Assessment of perquisite on housing loan provided by the employer at a concessional rate of interest under section 17(2)(iii) of the Income-tax Act, 1961.Analysis:The appeals before the Appellate Tribunal ITAT BOMBAY-D involved the assessment of a housing loan provided by an employer to an individual, who was an employee of the company. The Income Tax Officer (ITO) considered the difference between the interest rate charged by the employer and the fair rate of interest as a 'perquisite' under section 17(2)(iii) for the assessment years 1978-79, 1980-81, and 1981-82. However, the Assistant Commissioner of Income Tax (AAC) overturned this decision, stating that as per the employer's circular, the stipulated rate of interest was 8 per cent, the same rate deemed fair by the ITO. The AAC also referenced tribunal decisions to support the conclusion that no perquisite was involved in loans given at concessional rates of interest.The revenue, dissatisfied with the AAC's decision, argued that loans provided at concessional rates of interest by the employer constitute a benefit or 'perquisite' under section 17(2)(iii). The revenue relied on tribunal decisions to support their stance, emphasizing the difference between the fair rate of interest and the interest charged by the employer as the value of the perquisite. However, during the hearing, no representation was made on behalf of the assessee.The Tribunal considered the arguments presented by the revenue and the absence of representation from the assessee. While acknowledging the tribunal decisions cited by the revenue, the Tribunal also referenced other tribunal cases where it was held that loans granted at concessional rates of interest for house acquisition did not amount to taxable perquisites. The Tribunal highlighted the legislative history, noting the insertion and subsequent deletion of sub-clause (vi) in section 17(2) related to taxing such perquisites. The Tribunal concluded that the additions made by the ITO for the assessment years were not justified, as per the circular of the employer and the legislative intent. Therefore, the appeals filed by the revenue were dismissed.In conclusion, the Tribunal upheld the AAC's decision, ruling that the housing loan provided by the employer at a concessional rate of interest did not constitute a taxable perquisite under section 17(2)(iii) of the Income-tax Act, 1961.