2003 (4) TMI 27

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....e to the assessee's owned accommodation provided to the employees is not perquisites within the meaning of section 40A(5) of the Income-tax Act? In the case of Citibank N.A. v. CIT--decided on March 5, 2003, vide Income-tax Reference No. 5 of 1994, this court took the view that the expenditure incurred by the assessee-company on repairs and maintenance of flats owned by the assessee-company and used for the residence of employees is a perquisite within the meaning of section 40A(5) of the Income-tax Act. Therefore, to that extent, we answer question No. 1 in the negative, i.e., in favour of the Department and against the assessee. However, it is argued on behalf of the assessee that in this case, the assessee has incurred expenditure ....

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....s a value addition to the assets belonging to the assessee. That, by payment of premium for insuring the building, there is no such value addition. That, such payment is only to provide a cover against the risk of fire, theft, accident, etc., and, therefore, such payment does not relate to the assets of the assessee and, therefore, it is not covered by section 40A(5)(a)(ii). We do not find any merit in this argument. As held by us in our judgment in the case of Citibank N.A. v. CIT, section 40A(5)(a)(ii) states that where the assessee incurs any expenditure in respect of any asset of the assessee used by the employee, the ceiling prescribed under section 40A(5) stands attracted, the object being to disallow the expenditure by an employer....