1983 (7) TMI 100 - AT - Income Tax

Tribunal rules on salary components for rent-free accommodation valuation, emphasizing entitlement to benefits.

The Tribunal allowed the appeal in favor of the assessee, condoning the delay in filing the appeal and determining that foreign and project allowances, as ... Rent-free Accommodation Issues:1. Condonation of delay in filing appeal.2. Determination of perquisite value of rent-free accommodation.3. Treatment of foreign allowance and project allowance.4. Inclusion of income-tax paid by employer in salary calculation.5. Interpretation of perquisite under section 17(2)(iv) of the Income-tax Act, 1961.Analysis:1. The appeal was filed one day late, and the issue of condonation of delay was considered. The Tribunal admitted the appeal and condoned the delay after reviewing the assessee's request.2. The case involved the assessment of the perquisite value of rent-free accommodation provided to the assessee. The Income Tax Officer (ITO) included foreign allowance, project allowance, and income-tax borne by the employer in Iraq in the calculation. The Appellate Assistant Commissioner (AAC) upheld this decision, considering these amounts as part of the salary for determining the perquisite value.3. The assessee argued that the foreign and project allowances should not be treated as salary components for calculating the perquisite value. However, the Tribunal found that these allowances were not akin to dearness allowance and were intended to support the employee while stationed abroad, thus constituting part of the salary.4. The inclusion of income-tax paid by the employer in the salary calculation was disputed by the assessee. The Tribunal observed that under section 17(2)(iv) of the Income-tax Act, any sum paid by the employer for obligations that would have been payable by the assessee constitutes a perquisite, not part of the salary. The Tribunal noted that the tax perquisite should not affect the determination of the rent-free accommodation's perquisite value.5. The Tribunal further emphasized that the liability of the employer to pay income tax during the assessee's posting abroad should be considered a simple liability, not subject to grossing up or tax-on-tax calculations. As these aspects were not adequately addressed by the revenue authorities, the Tribunal set aside the orders of the AAC and the ITO, directing a fresh assessment to ascertain all relevant facts and provide the employee with the benefits entitled under the law.6. Ultimately, the Tribunal allowed the appeal in favor of the assessee, highlighting the importance of correctly interpreting and applying the provisions of the Income-tax Act to ensure fair treatment for the employee.