1991 (1) TMI 16

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....enant in the said house. He was also a whole-time director of M/s. Duncan Bros. and Co. Ltd., 31, Netaji Subhas Road, Calcutta, In accordance with the agreement with the said company, the assessee had to be provided with rent-free accommodation. Therefore, the said company, M/s. Duncan Bros. and Co. Ltd., paid rent on behalf of the assessee to the landlord of the said premises. The monthly rent was Rs. 1,900. He, accordingly, computed the perquisite value of the accommodation as per section 17(2)(i) of the Income-tax Act, 1961, read with rule 3 of the Income-tax Rules, 1962, at Rs. 10,234. The Income-tax Officer, however, did not accept the assessee's computation at Rs. 10,234 as per section 17(2)(i) of the Act. Instead he applied the pr....

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.... value of the accommodation under section 17(2)(i) of the Act was correct. The Tribunal then allowed the assessee's appeal. On these facts, at the instance of the Commissioner of Income-tax, the following two questions of law have been referred under section 256(1) of the Income-tax Act, 1961, for the opinion of this court. "l. Whether, having regard to the fact that the assessee being the actual tenant of the house occupied by him for which the assessee was under an obligation to pay rent to the landlord, the Tribunal was correct in law in holding that since the assessee's employer had directly paid rents to the landlord, the computation of perquisite value in accordance with the provision should be made in accordance with the provis....

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....tion which, but for such payment, would have been payable by the assessee; and" It is clear from the terms of the agreement with his employer that the assessee was entitled to rent-free accommodation. By letter dated March 21, 1985, the assessee also made it clear that he is a tenant in respect of premises No. 19, Belvedere Road, Calcutta, and he is also a whole-time director of the company and, in terms of the agreement with the company, the company is to provide the assessee rent-free accommodation and, as such, the company has been paying the rent on his behalf to the landlord in terms of the service condition. So long as the agreement by and between the employer and the assessee subsists, there is really no obligation on the part of ....