1982 (12) TMI 18

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....ns. We shall deal with each of the questions separately. Questions 1 & 2 go together. They read as follows : " 1. On the facts and in the circumstances of the case, whether the Income-tax Appellate Tribunal was right in law in holding that the house rent allowance, conveyance allowance, etc., paid to the employees of the assessee-company form part of the salary under section 40A(5) of the Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the club fees and medical bills should not be taken into account as perquisites for the purpose of disallowance under section 40A(5) of the I.T. Act ? " The Tribunal has refused to refer these questions on the ground that on a similar ....

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.... of the Madras High Court refers to the decision of the Calcutta High Court in CIT v. Kanan Devan Hills Produce Co. Ltd. [1979] 119 ITR 431 (Cal), to the decision of the Bombay High Court and to the Supreme Court's refusal to grant leave against the judgment of the Bombay High Court as well as to a communication of the Central Board of Direct Taxes, and holds that payments made directly to an employee do not fall within the meaning of the expression "perquisites". We respectfully agree with the above interpretation and hold that the allowances concerned herein, viz., house rent allowance, conveyance allowance, club fees and medical bills which are amounts paid directly to the employees, do not fall within the meaning of the expression " per....

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....ther the Tribunal was right in holding that the perquisite value of the rent-free accommodation during the period of the leave of the employee should not be considered for the purpose of disallowance under section 40A(5) of the I.T. Act ? " On this question, the Tribunal has found as a fact that on the employee departing on leave, he handed over possession of the house to the assessee-company. Therefore, the Tribunal was right in holding that the perquisite value of rent-free accommodation during the period of leave of the employee cannot be considered for purpose of disallowance under s. 40A(5) of the Act. Question No. 7 reads as follows: " Whether the Tribunal was right in holding that section 40(c) and not section 40A(5) is applicable....