Rent-free employer accommodation and related owner expenses were not expenditure for expenditure-tax purposes under the statutory definition.

The annual letting value of an employer company's own rent-free residential accommodation, together with related taxes, insurance premium and incidental charges, was not "expenditure" under the Expenditure-tax Act. "Expenditure" under section 2(h) covers sums actually spent or disbursed, and section 4(i) applies only where another person incurs expenditure in respect of the assessee's obligation or personal requirement. Providing a company-owned house for free residence was treated as use of a capital asset, not an outlay; foregone rent was not expenditure. Taxes and insurance remained the owner's liabilities and were payable irrespective of occupancy, so they were not paid on behalf of the employee or for his benefit.

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Issues: Whether the annual letting value of rent-free residential accommodation provided by an employer company, and the taxes, insurance premium and other incidental charges relating to that accommodation, constituted "expenditure" includible in the assessee's taxable expenditure under section 4(i) of the Expenditure-tax Act, 1957.

Analysis: "Expenditure" under section 2(h) covered sums spent or disbursed by the assessee and also amounts required to be included under the Act. Section 4(i) applied only where a person other than the assessee incurred expenditure in respect of the assessee's obligation or personal requirement. The provision of the company's own house for free residence was a use of a capital asset and not an expenditure by the company. At most, the company forewent rent, but foregone rent was not expenditure. The taxes and insurance on the house were liabilities of the owner and were payable regardless of occupancy, so they were not paid for and on behalf of the assessee or for his benefit.

Conclusion: The disputed sums did not constitute expenditure within section 4(i) and could not be included in the assessee's expenditure-tax assessment. The question was answered in favour of the assessee.

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