TaxTMI 
TaxTMI 
2002 (2) TMI 74
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.... N.K. Agrawal JJ.) on November 30, 1998. The questions were answered by their Lordships. However, in Income-tax Reference No. 34, of 1983, the following order was passed: "Learned counsel appearing on behalf of the Revenue states that the question raised for the assessment year 1975-76 in regard to perquisite value of expenditures incurred on the maintenance of rent-free accommodation and on the servants provided by the assessee-company to its directors needed consideration and, thus, these questions are not covered by any earlier decision of this court." Thus, the matter has now been placed before this Bench. A perusal of the paper book shows that in respect of the assessment year 1975-76, the following two questions have been ref....
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....arned counsel for the Revenue, contends that the expenses incurred by the assessee on the maintenance of a building provided as rent-free accommodation to one of the directors by the assessee are directly relatable to a perquisite and had to be taken into consideration while determining the amount admissible under section 40A(5) of the Act. On behalf of the assessee, it has been pleaded that the view taken by the Tribunal is in strict conformity with the provisions of law. A perusal of the order passed by the Tribunal shows that the decision was based on the view taken by the Kerala High Court in the case of Travancore Tea Estates Co. Ltd. [1980] 122 ITR 557. It deserves mention that this view of the Division Bench was expressly overrule....
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....loyee, the expenditure incurred in that behalf would equally have been subject to the ceiling in section 40(c)(iii). Suppose, in another case, a house owned by the assessee (furnished and maintained by the assessee) is similarly placed in the possession and enjoyment of the employee and the assessee took on rent an air-conditioner and installed it in the said house, the whole expenditure would have been subject to the ceiling in section 40(c)(iii). Now, the question is whether Parliament intended differently when it put in section 40(a)(v) in the place of section 40(c)(iii). In this connection, it may be noted that section 40(a)(v) was in force from April 1, 1969, to March 31, 1972, only and that section 40A(5) which came into force with ef....
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....r and 50 per cent. of the expenditure on gardeners and watchman, should reasonably represent the value of the perquisite made available to the employees ... and directed the disallowance under section 40(a)(v) of the Act...". Mr. Sawhney contends that the wages paid to the servants constitute a perquisite within the meaning of section 40A(5) and, thus, could not be excluded while computing the amount admissible under section 40A(5). On the other hand, Mr. Jain contends that in view of the circular, the view taken by the Tribunal was correct in law. It is the admitted position that the circular dated January 12, 1970, issued by the Central Board of Direct Taxes is regarding the valuation of perquisites under section 17(2). Thus, it is ....