TMI Blog1994 (6) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... t of India and the Government of Republic of Korea. The said claim came to be rejected by the Income-tax Officer with reference to the relevant clauses/articles of the same agreement. He accordingly brought to tax the amount of salary after allowing standard deduction. To conclude the narration of facts vis-a-vis the question of salary it is an accepted fact between the parties that the Commissioner of Income-tax (Appeals) upheld the action of the Income-tax Officer and further appeals are pending before the Tribunal. 4. The present dispute between the parties arises out of the orders passed by the Commissioner of Income-tax under section 263 in all these cases whereby he has opined that the assessment orders passed by the Income-tax Officer were erroneous and prejudicial to the interest of revenue as he had not subjected to tax the "Perquisite" value of the "free boarding and lodging facilities" provided to the appellants while they were working on different installations. It may be mentioned at this stage that before the Commissioner of Income-tax in the said proceedings the case on behalf of the appellants at the first instance was that the claim was not under the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clock on the rigs and the provision of a bunker and food which was necessitated by the arduous nature of duties performed could by no stretch of imagination be taxed as a "perquisite"; (iii) That whereas the Commissioner of Income-tax had initiated proceedings under section 263 with reference to the provisions of section 10(14) he had subsequently accepted the stand taken on behalf of the appellants that said section was not relevant and had then specifically asked them to show cause as to why section 17 not be invoked; (iv) That the decision of the Tribunal in the case of some of the other employees of HHI in ITA Nos. 4025 (Delhi) of 1992 and others dated 26-2-1993 had proceeded on the premise that provisions of section 10(14) as amended were required to be considered whereas the Commissioner of Income-tax in all the present appeals had clearly excluded the aforesaid section and restricted himself to the provisions of section 17. In other words, the said decision of the Tribunal was not applicable to the facts of the present appeals; (v) That the question of taxability of salary income was no doubt pending before the Tribunal, but the perquisite value of the bunker and foo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mently supported the orders passed by the Commissioner of Income-tax. The subsequent arguments advanced by him were a reiteration of the reasons recorded by the Commissioner of Income-tax in initiating action under section 263 and subsequently directing the Assessing Officer to subject to tax the perquisite on account of free boarding and lodging. He made a specific reference to the decision of the Tribunal in the case of some of the other technicians of HHI in ITA No. 4025 (Delhi) of 1992 whereby the action of the Commissioner of Income-tax under section 263 came to be upheld. It was urged that since the facts of the present appeals were identical the Tribunal be pleased to confirm the orders passed by the Commissioner of Income-tax under section 263. 11. We have examined the rival submissions and have also perused the material on record to which our attention was invited. The decisions cited at the bar have also been considered. At the outset, we would like to refer to the decision of the Tribunal in the case of some of the other technicians of HHI and which the learned Departmental Representative has relied upon. The Tribunal has referred to the "amended provisions" of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income therefrom. The followers of the Acharya paid a permanent religious tax to the institution and in addition it gave to the Acharya a voluntary contribution in the form of "Salutation tax" and presents. The assessee agreed to treat the aforesaid items as the income of the institution in return for a permanent personal allowance. In a scheme framed subsequently by the Hon'ble High Court it was provided (i) that the assessee be entitled to set aside for his personal use a sum of Rs. 2, 000 p.m. from the trust income; and (ii) that expenses of his house-hold viz., residence, food, clothing, servants, etc., would be defrayed by the institution. The tax authorities treated both the items as the income of the assessee. On a reference at the instance of the assessee, the High Court upheld the action of the tax authorities in respect of the first item, viz., the cash receipt of Rs. 2,000 p.m., but answered the question in favour of the assessee on the taxability of the amount expended by the trust towards residence, food, clothing, etc. Their Lordships discussed the English and Indian cases on the subject in coming to the conclusion that they did. We reproduce herewith relevant extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the income of the assessee." "That leaves only one decision before we go to the facts of the case and that decision is the one reported as Daly v. Commissioner of Inland Revenue. This is rather an important decision for it bears a fairly close analogy to the facts of the present case. The assessee in this case was the priest-in-charge of a Roman Catholic Mission in the Archdiocese of Glasgow. The income of the mission was mainly derived from offertories and other contributions by Church members which the Ordinances of the Roman Catholic Church in Scotland deem to be the property of the Church and not gifts to the priest, but out of the which the priest will receive what is needed for his 'seemly maintenance'. The income of theMissionwas paid into a bank account in the names of the assessee and his Archbishop and normally all the expenses of the mission were met by cheques drawn on this account by the assessee. Included amongst these disbursements was a salary of 50 to the assessee, which was admittedly chargeable to income-tax, and household expenses, viz., food, drink, fuel, wages, etc., incurred at the presbytery house where the assessee, in accordance with the regulations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et by the institution. The institution is to incur the expenses in connection with the various matters relating to the household of the Acharya such as providing food, clothing, servants, horses, carriages, elephant, etc. This obligation is founded on the basic principle of the faith that the Acharya is a fundamental part of the institution and the obligation to maintain the Acharya is, therefore, a duty laid upon the institution..." "The case, therefore, in our opinion stands on the same footing as the case of the priest-in-charge in Daly v. Commissioner of Inland Revenue. The benefits received by the Acharya by reason of the institution providing residence, food, clothing, servants, horses, carriages, elephant, etc., for the Acharya and the members of his household and incurring expenditure which can be turned to pecuniary account. The question whether the benefits are capable of being turned to pecuniary account is a question which must be judged as a whole and so judged, it is to our minds clear that they are incapable of being converted in terms of money and cannot, therefore, be regarded as income assessable to tax in the hands of the assessee." According to Their Lordshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel that free boarding made available to the present appellants cannot be subjected to tax under any of the sub-clauses of section 17(2). 16. Then again the learned counsel relied on the decision in the case of Wilkins (Inspector of Taxes) the facts of which were that the director of a company decided to offer as a gift to each of its employees a suit, overcoat or raincoat made to order by a tailor as a Christmas present. Under the aforesaid gift scheme, an employee of the company could visit the tailor and get himself fitted for a suit, raincoat or overcoat as he liked up to a value of pound 15. and the bill was to be sent to the company. The taxpayer in this case received a suit costing pound. 14.15 s. and the said sum was included in his assessment as part of 'perquisites or profits' arising from the employment. 17. The taxpayer appealed to the Special Commissioners, who held that the amount to be included in his assessment was not pound 14.15 s., but the value of the suit in his hands, on the footing that he could immediately sell it as "second-hand". The value arrived at was accordingly pound 5. On the matter being further carried to the House of Lords by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 3 of the Income-tax Rules, 1962, but which on further appeal came to be deleted by the Commissioner of Income-tax (Appeals) on the ground that the same was exempt under section 10(14). On further appeal, the Tribunal upheld the view taken by the Commissioner of Income-tax (Appeals) and on a further reference preferred by the revenue the Hon'ble High Court confirmed the order of the Tribunal observing in the process as under :-- "Here, the assessee was provided with rent-free accommodation by his employer while he was on tour inIndia. It has been found by the Tribunal as a fact that the rent-free accommodation was provided by the foreign company to the assessee necessarily for the discharge of his official duty for which he was sent toIndia. He visitedIndiaseveral times between May 1977, and March 1980. The assessee was not occupying the rent-free accommodation by virtue of his posting as an employee of the foreign company In Calcutta. It is in connection with his official duty for the purpose of supervising the erection of gas turbine atCalcutta, Siliguri and Haldia that the assessee had to visit these places. Such visits are in connection with his official duty in the premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, House Rent Allowance etc. There is also a reference to leave encashment, reimbursement of tuition fees and night-allowance granted to Loco-running staff. No doubt, the issue was decided against the petitioner, but this is what Their Lordships had to observe insofar as the question of "perquisite" was concerned:--- "Perquisite" is an advantage received by the holder of an office over and above the salary. Any benefit received incidental to employment in excess of salary is a 'perquisite'. Perquisite postulates relationship of employer and employee. Perquisite is a benefit attached to the office. We have no hesitation in holding that city compensatory allowance, house rent allowance and dearness allowance are benefits attached to an office and incidental to the employment. 'Perquisite' is what is received by an employee over and above the salary. Any additional benefit incidental to employment is a perquisite." 23. In our opinion the aforesaid decision of the Hon'ble High Court is distinguishable insofar as the facts of the present appeals are concerned where the main question before us is whether provision of food to the appellants on the rig in the course of the performance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the Commissioner these were required to be taxed and that is what he directed the Income-tax Officer to do after hearing the assessee and perusing the material on record. No doubt, there may be certain decisions of the Courts which may support the stand taken on behalf of the assessee on merits, but it cannot be disputed between the learned counsel that the issue is definitely debatable. There is nothing in the assessment orders which would go to show that this aspect of the matter was examined by the Income-tax Officer with reference to the facts of the case. It is another matter that in the subsequent proceedings nothing was taxed on account of lodging and the Tribunal by the present order upheld the stand taken on behalf of the appellants that on the facts and in the circumstances of the case no amount was required to be added on account of the provision of food within the meaning of section 17(2). We, therefore, uphold the action of the Commissioner under section 263, but on merits, hold that nothing is required to be taxed in respect of the provision of food to the assessees. As already stated earlier, we do not adjudicate upon the question whether provision of free lodgi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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