1986 (4) TMI 120 - AT - Income Tax

Tribunal upholds decision on accommodation perquisite value, rules in favor of taxpayer

The Appellate Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) to delete the addition made by the Income Tax Officer for the value ... - Issues:- Dispute over the addition made by the ITO for the value of perquisite in respect of accommodation provided by the employer on concessional rent.Analysis:The appeals before the Appellate Tribunal ITAT DELHI-E involved the assessment years 1980-81, 1981-82, and 1982-83. The primary issue in all the appeals was the deletion of the addition made by the Income Tax Officer (ITO) for the value of perquisite related to accommodation provided by the employer on concessional rent. The ITO contended that the rent charged to the assessee was lower than the prevailing rent in the locality, leading to the classification of the accommodation as a perquisite. The ITO calculated the reasonable rent at 50 paisa per square feet and added Rs. 5,440 in each year. However, the Commissioner of Income Tax (Appeals) [CIT(A)] disagreed with the ITO's view and deleted the addition. Consequently, the Revenue appealed the CIT(A)'s decision before the Appellate Tribunal.During the proceedings, the Departmental Representative supported the ITO's order, arguing that the accommodation provided to the assessee was on a concessional rent due to their employment with the company. Conversely, the counsel for the assessee contended that the accommodation was let out in the ordinary course and was not linked to the employment relationship. The counsel also highlighted the application of the Rent Control Act to the accommodation, emphasizing that the standard rent had been determined in compliance with the law, justifying the deletion of the addition.Upon evaluation of the arguments presented, the Appellate Tribunal noted that the agreed rent was Rs. 30 per month, with no evidence casting doubt on the genuineness of the agreement. The Tribunal emphasized the principle that the landlord is bound by the agreed rent in a tenancy contract. Additionally, it was observed that the Rent Control Authority had declared the standard rent for the accommodation, indicating that the rent set by the authority was reasonable. Furthermore, there was no indication that the accommodation was provided to the assessee as part of their employment contract. The Tribunal referenced a similar case, K. N. Singhania, where the assessee's contention was accepted, leading to the dismissal of the appeals in the present case based on similar reasoning.Ultimately, the Appellate Tribunal found no merit in the appeals and consequently dismissed them based on the reasons outlined in the judgment.