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2012 (8) TMI 646 - DELHI HIGH COURTPerquisite value of rent free accommodation - Expenditure on repair of building - inclusion of amount spent by the employer under clauses (iii) & (iv) of Sub-Section 2 of Section 17 by AO - Held that:- A careful reading of the Lease Deed nowhere suggests that the assessee had agreed to an obligation to renovate the expenses. As that of the original sum of Rs. 50.51 lakhs, Rs. 10 lakhs was spent towards furniture, the AO took that into consideration while working out the value of furnished residence, for the purpose of calculating the tax liability - The perquisite value of rent free accommodation under Section 17(2)(i) had been declared by the appellant in return of his income which was assessed, thus the reference to Section 17(2)(i) was unwarranted because the assessee was under no obligation to incur the expenses on repairs and renovation or modification of rent free accommodation The express provision of Rule 3 of the Valuation Rules elaborates various contingencies in relation to the perquisite of rent free accommodation, rules out the intention of Parliament to treat expense in relation to improvement, repairs or renovations, as falling within the meaning of "perquisite" - thus, as regards Section 17 (2) (iv), the argument on behalf of the revenue that repairs and renovation expenses constituted an obligation of the employee/assessee, which was borne by his employer, is meritless - if the AO had returned a finding that the premises were to be valued at market value (of the rental), in case it increased as a result of the renovations, the only prescribed mode was to apply the method indicated by Rule 3 (a) (iii) of the Valuation Rules and not have included the entire expenses, and spread it over a period of five years, for the purpose of saying that the whole of such expense constituted a perquisite - in favour of assessee.
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