TaxTMI 
TaxTMI 
1986 (6) TMI 66
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....ges Replastering and Miscellaneous building paid to society painting charges Repairs and Plumbing -------------------------------------------------------------------------------------------- Rs. Rs. Rs. Rs. -------------------------------------------------------------------------------------------- Daisyle 10,761 3,600 6,415 &n....
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....r note that in the said case of John Wyeth & Brother Ltd. there was no controversy that painting charges of the flats were a benefit or amenity. In respect of wages paid to servants for up-keep of the said three flats, the Tribunal had held that while one-fourth of the wages were incurred by the employer company to discharge its contractual obligation under the lease agreement with lessor, remaining 75 per cent of the expenditure was a benefit or amenity provided by John Wyeth & Brother Ltd.'s case to its employees. 5. The Commissioner (Appeals), in the present case, noted that the total repair expenditure of Rs. 26,952 on the three falls was much higher than in the case of John Wyeth & Brother Ltd. and that normally it was the responsibility of lessor to repair the flats and keep it habitable condition and if under the lease agreement, this responsibility was taken over by the lessee, rent was reduced proportionately and, therefore, the expenditure on maintenances and repairs of flats added to the rent would represent the perquisite given by the employer to the employee which would be covered by section 40A (5). The Commissioner (Appeals) accordingly held that whole of said exp....
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....ITD 18. We not that in the said case also, the flat was owned by the employer company and it was held in that case that municipal taxes were includible for computing that disallowance under section 40(c) of the Act but the flat maintains expenses and the telephone expenses were not includible. 10. the revenue lied on the Tribunal 'A' Bench, Bombay's decision in Sandoz (India) Ltd. [IT Appeal No. 2421 (Bom.) of 1983] for the assessment year 1979-80 where in paras 8-12, the tribunal discussed this matter and following the decision in Bombay Burmah Trading Corpn. Ltd. v. CIT [1984] 145 ITR 793 (Bom.) held that the actual expenditure incurred by employer company on the flats was includible for working out the disallowance under section 40A (5) and that the said Bombay High Court in Mercantile Bank Ltd.'s case was not brought to the notice of the bench. The Bench noted that the Kerala High Court in Forbes Ewart & Figgis (P.) Ltd.'s case had held that the actual expenditure on maintains of the building was includible for computing the disallowance the Bench rejected the assessee's reliance on Britannia Industries Co. Ltd. v. CIT [1982] 135 ITR 35 (Cal.) in view of the said Bombay High....
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....has been given a rent-free accommodation, provision of such accommodation means that all the expenses on the said accommodation means that all the expenses on the said accommodation are to be borne by the employer because the employer has undertaken to bear all the burden in respect of the said flats. Sub-clause (ii) of section 40A (5) (a) tales in its sweep 'any expenditure which results directly or indirectly in the provision of any perquisite'. Thus, even the expenditure on painting, repairs and society charges would be covered by the said sub-clause. We are, therefore, unable to accept the assessee's contention that perquisite of rent-free accommodation would cover only the rent and not any other expenditure incurred by the employer company providing rent-free accommodation to the employee. 13. Even otherwise, the cases are distinguishable where the employer as owner of the property has necessarily to incur some expenditure on the property in his capacity as a owner irrespective of the fact whether the said property is occupied or not. In this category may fall municipal taxes and necessary repairs to keep the property in a habitable condition. Though we are inclined to take....
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.... Bombay High Court in Bombay Burmah trading Corpn. Ltd.'s case. 17. In the present case, we have already noted above that there was no (contractual or otherwise) liability of the assessee-company as a lessee to repair the flats. Further, expenditure on repairs of the three flats was only nominal and the main expenditure was on account of society charges paid for common services like lift, water, etc., painting and replastering of the three flats. In these circumstances, we uphold the orders of lower authorities directing that the expenditure of Rs. 26,521 was includible for considering the disallowance under section 40A (5). 18. We now deal with the other grounds in the cross appeals by the assessee and by the department. Assessee's appeal : 19. Ground No. 1(a) : The IAC had included for the purpose of computation under section 40A (5) the actual rental expenditure incurred by the assessee-company in providing rent-free accommodation to its three employees. The assessee's contention is that the value of the said perquisite should be computed under rule 3 of the Rules. the Commissioner (Appeals) had rejected this contention vide para 5 observing that while rule 3 applied in....
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....30-4-1985 in I. B. M. World Trading Corpn. [IT Appeal No. 4080 (Bom.) of 1883] for assessment year 1978-79 wherein paras 11-12, it was held that terminal allowance under section 32(1) (iii) of the Act is not an allowance for the user of the car but was an allowance given for the loss incurred on sale below the written down value and, therefore, terminal allowance does not spring from user but from the factum of sale. It was, therefore, urges that even terminal loss of Rs. 634 claimed under section 32(1) (iii) on the sale of the said car to Mr. Trehan which was allowed by the IAC was not hit by section 40A (5). We accept the assessee's contention and hold that the IAC was not right in treating Rs. 8,000 as a perquisite under section 40A (5) on the sale of car to Mr. Trehan. 25. Ground No. 2 : the assessee-company had made a provision of Rs. 30,000 for legal expenses which was disallowed by the IAC vide para 10 of his order after noting that similar provision of Rs. 46,500 was made in last year but the same was not utilised and had been written back this year and the assessee had again claimed the aforesaid amount of Rs. 46,500 in this year. The IAC, accordingly, disallowed both t....
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.... No. 5 : This ground relates to Rs. 26370 being the sundry credit balances written off by credit to profit and loss account of the assessee-company. Before the Commissioner (Appeals) the assessee claimed that the said amount should not be treated as part of its income because the assessee's liability to creditors still subsisted. The Commissioner (Appeals) vide para 13 noted that the list of items furnished by the assessee (P. B. 31) showed that no details were available in respect of Rs. 13,464 which consisted of individual items of less than Rs. 500 each. Remaining amount consisted of five items in which the major items were of Rs. 9,000 of Sonia Films, Bombay and Rs. 1,487 of Indian Express (Madurai) Ltd. The Commissioner (Appeals) further observed that no evidence was produced to show that said credit balances were in fact a liability of the assessee-company just because there was a credit balance, it does not necessarily follow that the amount is question is liability of the assessee-company. The Commissioner (Appeals), therefore, held that in the absence of any evidence to show that the said credit balances were in fact the liability of the assessee-company he could not accep....
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....aining (after paying transit insurance of customers) was held to be the income of the assessee when it was not claimed by the customers and the assessee chose to treat those amounts as its income. Similar were the observations of the Allahabad High Court in India Motor Transport Co. v. CIT [1978] 114 ITR 677. 33. The Punjab and Haryana High Court in CIT v. Haryana Co-operative Sugar Mills Ltd. [1985] 154 ITR 751 observed that when the assessee had transferred certain amounts to its profit and loss account as amounts forfeited and the question was of assessability of the said amounts under section 41(1) of the Act, onus was on the assessee to show that the said amounts were not assessable. 34. In the case before us, the assessee has not led any evidence before the lower authorities or before us to show that the amounts in question of Rs. 26,370 was not relating to its trading receipts or was not assessable. In these circumstances, we uphold the order of the Commissioner (Appeals) on this point. 35. In the result, the assessee's appeal is partly allowed. Departmental Appeal : 36. Reimbursement of medical expenses : The IAC vide para 6 has included the said item for dis....