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TMI Blog2012 (8) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of proceedings, observed that for the year under consideration the assessee's employer had incurred expenses of Rs.50 lakhs towards repair and renovations of the residential accommodation occupied by him. To examine the matter further, a notice under Section 131 was issued to the assessee. In response to certain queries, the assessee's representative furnished answers. He had contended that his predecessor in the corporation had stayed longer than was expected and for that duration very little money was incurred by GE International Operations Corp. Inc. for maintaining the residence i.e. 4 Panchsheel Marg. When the assessee took over his position, it was difficult for him to find a residence comparable to what he was used to in United States, as a result of which the employer decided to extend the lease for the house which had been leased for the assessee's predecessor and upgrade the facilities befitting a person of his seniority and status. The employer GEIOCI approved this arrangement and accordingly paid about Rs.50 lakhs to M/s Framework Interiors for carrying out various works like electric wiring, plumbing, air-condition ducting, security fencing, guard rooms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me premises earlier and if any normal repairs were required, the appellant was bound to ask the owner to carry out such normal repairs and replacement as the appellant is paying a rent as high as about Rs.2 lakhs per month (Rs.23.70 lacs per annum) to the owner of the premises. This rent has gone up to Rs. 5 lacs per month in later years. The definition of perquisite is wide enough to take into account any benefits granted by the employer whether by way of advance payment or by way of reimbursement for the facilities and benefits which an employer agrees to grant to its employees and the definition of perquisite as brought out is only an inclusive definition. Whether the payment is made in one year or two years, so long as the benefit is given and the expenditure is contracted to be paid, the perquisite resulting therefrom has to be taxed in that year. The appellant has not brought on record any evidence that only part of work was completed during the year. There is therefore no ground to interfere with the order of the Dy. Commissioner bringing to tax the perquisite on account of Rs.50 lakhs incurred by the employer for renovation and repairs to the rented premises, leased by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that which is provided by the Rule. Counsel emphasized that if the value of that perquisite exceeds what is actually prescribed, the legislature has mandated a formula i.e. 10% of the salary of the individual increased by a sum equivalent to the amount by which the fair rental value of the accommodation exceeds 20% of the salary. In this case, the Assessing Officer had limited discretion, if at all, in calculating the fair market value and follow the mechanism of Rule3(a)(iii). However, he did not do so and proceeded to add the entire sum of Rs.40,41,977/- (the sum of Rs.10 lakhs having been charged and suitable amount, assessed as perquisite on account of furniture, provided by the employer). 8. Counsel for the Revenue submitted that the appeal is without merit and that the findings of the ITAT as well as the lower authorities need to be affirmed. Reliance was placed upon the assessee's terms of appointment as well as certain conditions in the lease deed to say that the assessee had undertaken the obligation of hiring accommodation. If he agreed to renovate the premises extensively, the value of the property would naturally get enhanced. In any event, the obligation to renovate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate, to education allowance for any eligible children. e. You will be provided with a telephone at your residence. f. You will be provided with a company car and driver for business and personal use, for which you will be liable for tax. g. Medical expenses incurred for you and your dependents for health care services, including physicians and hospitalization expenses, will be reimbursed by the company in accordance with standard practice. h. You will be entitled to 20 days of annual vacation during each year of service. i. You will be eligible for those local holidays recognized by GEIOC, India. j. The provisions of these benefits will be in accordance with GEIOC procedures and within any cost limits imposed by those procedures. " 12. In this case the assessee shifted into the premises 4, Panchsheel Marg, which before him, had been in occupation of his predecessor, Mr. Bradon. The assessee's contention that his predecessor had not renovated the premises and that in tune with his service conditions and the status that he enjoyed within his employer's organization, he was entitled to a certain standard o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d; and (2) the fair rent for the furniture (including television sets, radio sets, refrigerators, other household appliances and air-conditioning plant or equipment) calculated at [10 percent] per annum, of the original cost of such furniture of if such furniture is hired from a third party, the actual hire charges payable therefore." 14. In Commissioner of Income-tax v. L. W. Russel AIR 1965 SC 49 the Supreme Court noticed that perquisites are "causal emoluments, fee or profit attached to an office or position in addition to salary or wages". Essentially, they are non-cash benefits given by an employer to employees in addition to cash salary or wages. However, these may include cases where the employer reimburses expenses or pays for obligations incurred by the employee. The term is defined in the Section 17(2) of the Income-tax Act as including: (1) Value of rent-free or concessional rent accommodation provided by the employer. (2) Value of any benefit/amenity granted free or at concessional rate to specified employees etc. (3) Any sum paid by employer in respect of an obligation, which was actually payable by the assessee. 15. "Salary" in Section 17 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us states, the express inclusion of one thing is the exclusion of all others. In this case, the specific inclusion of a condition for filing a recriminatory petition under Section 97 of the Act, namely that a declaration that the election petitioner or any other candidate is the returned candidate should be filed, excludes its filing in all other cases. Simply put, Section 97 of the Act bars filing of a counter-claim by way of a recrimination petition when an election petition is filed without seeking for a declaration that the election petitioner or any other candidate is the returned candidate." The express provision of Rule 3 of the Valuation Rules - which 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". 18. 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. The material extracts of the Lease Deed nowhere spell out any obligation to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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