TMI Blog2015 (7) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... ion drawn in the impugned order of the ld. CIT(A), discussion made in the assessment order, contentions of the ld. Counsel for the assessee & Revenue, and material available on record are kept in justaposition and analyses, we find that no benefit accrued to in the hands of the assessee in the form of perquisite. Accordingly, we do not find any reason to interfere with the findings recorded by the ld. CIT(A) which resulted into the deletion of addition made on account of perquisite in the hands of the assessee. - Decided against revenue. - I.T.A. No.5319/Mum/2012 - - - Dated:- 21-1-2015 - SHRI R.C. SHARMA AND SHRI SANJAY GARG, JJ. For The Appellant : Shri Jeetendra Kumar For The Respondent : Shri D.P. Bapat ORDER PER R.C. SHARMA, A.M. : This appeal filed by the Revenue is directed against the order of ld. CIT(A) 36, Mumbai dated 19-6-2012 for the A.Y. 2009-10 wherein the following grounds have been taken by the revenue: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) e r red in deleting the addition of ₹ 1,33,26,1431- without appreciating the difference between the market rent and the rent actually paid by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. However the A.O. did not accept assessee s contention and determined the perquisites in respect of the rent free accommodation at ₹ 1,33,46,183/- and made the addition of ₹ 1,33,26, 143/- after giving the credit of the rent paid by the assessee. By the impugned order, the ld. CIT(A) deleted the addition by observing as under:- 7.0 I have considered the above submissions and the order of the AO. First, can there be a contract of employment and independent contract of tenancy between the very same parties, one in the capacity of employer - employee and the other in the capacity of landlord and a tenant. Second, is the contract of tenancy valid if the land lord agrees to sell the property to the tenant, for a predetermined consideration, on the happening of a certain event? And third, if the answer to this question is in affirmative, can the provision of Section 17(2)(11) be invoked to determine the amount of perquisite being the deemed value of the benefit at specified rate of salary to the extent it is in excess of the rent recovered from the .employee/ tenant? On the first question, I find no legal authority or principle to deny coexistence of employer-empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent for the accommodation. This fact is re-enforced by the receipt of HRA from CIPLA which payable only if the appellant was not provided rent free accommodation. The amount of HRA is fully taxed. In these circumstances, the provisions of Section 17(2)(11) can be invoked only if CIPLA has provided accommodation to the appellant in the capacity of the employer. In the present case, it is not so. The appellant has occupied the accommodation as a tenant of CIPLA, being the land lord of the premises. CIPLA has not recovered any rent from t e appellant pursuant to employer-employee relationship; rather CIPLA has received rent from the appellant in terms of contract of tenancy independent of the contract of employment. Therefore, I am of the considered view that the deemed mechanism of computation of value of perquisite under section 17(2)(ii) cannot be applied to the facts of this. 7.2 As a result the addition of ₹ 1,33,26,143/- made by the A.O. u/s 17(2)(ii) is deleted. 4. We have considered the rival contention, carefully gone through the orders of authorities below and deliberated upon the judicial pronouncements referred by the lower authorities in their respective ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner in which the payment for transfer of property shall be made and that the assessee shall be bound to purchase the property subject to specific terms and conditions mentioned therein. The agreement is of a composite nature containing the covenants of conditional sale of property and grant of tenancy rights. Para 3.4.3 of AO's order Further it is noticed that as per this agreement, the assessee has got an opportunity to stay in this house by virtue of his relation with the company being its Chairman and not in a capacity of protected tenant. The perusal of this agreement reveals that this property was purchased by M/s Cipla Ltd especially for the residential use of assessee. The assessee was eligible to receive the benefits of rent free accommodation from the Cipla Limited as per the terms of appointment. There should be no objection if the assessee elected to forgo this benefit. There is no prohibition in law for co-existence of relationship of employer and employee as also of landlord and tenant particularly if the latter arrangement is on arms length basis on consideration of payment of standard rent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y till the conditions in the agreement are not completed. It does not give the assessee a right as a tenant and in fact is only a standby arrangement. It is only because of the authority and relation that the assessee enjoys with his employer that despite of the specific agreement the same has not been purchased by him even after the lapse of more than 32 years. It would not have been possible for any other person but the chairman of the employer company to enter in an agreement and not complete it on his will. Had there been any other person staying in this property at such a nominal rent the owner would have definitely made efforts to evict him. No such effort was made or even contemplated by the owner of the property MIs. Cipla Ltd., just because its Chairman is staying there. Therefore, it is clear that M/s. Cipla Ltd., was under no obligation to out this property to the assessee at a nominal rent of ₹ 1670 p.m. and has done so onl y because of the existence of empl oyer-empl oyee relation. This establishes beyond doubt that assessee was staying in the capacity of his position in the company as an employee and not as a protected tenant. We are unab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit actual or notional since he has paid standard rent to CIPLA. Para 4.1 of the order The value of any concession in the matter of rent n respect of any accommodation provided to the assessee by his employer is taxable as per the provisions of section 1792)(ii) of the IT Act. It has beenheld n Wilkins V Rogerson (49 ITR 395(CA) that perquisited are valued on the basis of their value to the employee and not on the bass of cost to the employer for providing such benefit. An employer may own residential accommodation and provide it at a concessional rent to his employee. `The question of determining perquisite value for provision of accommodation at concessional rent being the excess of the specified rate of salary over the rent recovered from the employee, will arise only where the rent is recovered from the employee and not when the rent is received from a tenant under an enforceable tenancy agreement ever if the tenant is also the employee of the land lord. 5. After considering the assessee s reply with respect to each and every aspect, the ld. CIT(A) recorded his findings that the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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