TMI Blog1993 (3) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... 0A(5) of the Income-tax Act, 1961?" The facts relating to the question are that the assessee did not take into account the perquisite value in respect of the proportionate municipal taxes and repairing charges incurred by the assessee for the portion of the premises occupied by its employee, Shri H.P. Singhee. The Income-tax Officer disallowed Rs. 20,000 under section 40A(5) being the estimated value of perquisite in respect of proportionate municipal taxes and repairing charges incurred for the portion of the premises occupied by Shri H.P. Singhee. The disallowance was, however, deleted by the Commissioner of Income-tax (Appeals) in appeal. Against the aforesaid order of the Commissioner of Income-tax (Appeals), the department appealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanatory Note placed before Parliament the following as Objects and Reasons for introducing the provision "(2) Expenditure on providing perquisites, benefits or amenities to higher paid employees in businesses and professions. In the case of companies, the deductible amount of expenditure incurred by them in providing perquisites, benefits or amenities (subject to certain exceptions) to their higher paid employees is at present limited to 20 per cent. of the basic salary of each employee. It is proposed to extend this provision to non-corporate employers also and to bring within the purview of the limit any expenditure or allowance admissible to the employer in respect of any assets provided by him to the employee free of charge or on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to suppress. A mass of case law has evolved around the said provisions of section 40(c)(iii), section 40(a)(v) and section 40A(5) of the Act. Learned counsel for the Revenue relied upon the decision of the Bombay High Court in CIT v. Yorkshire Insurance Co. Ltd. [1986] 162 ITR 565. There, the issue was whether the depreciation in respect of the flat occupied by a director comes within the ambit of section 40(a)(v) as perquisite. The court observed that section 40 commences with the words "Notwithstanding anything to the contrary in sections 30 to 39". Thus, section 32 which deals with depreciation is also embraced by section 40. Section 32 provides that, in respect of depreciation, inter alia, on buildings owned by an assessee and used f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en held that the Tribunal was not right in allowing expenses for maintenance of the buildings beyond the limit specified in section 40(a)(v) for the period when that provision was in force. In the case of Harrisons and Crossfield (India) Limited v. CIT [1990] 183 ITR 614, the Kerala High Court held that, on a reading of section 40(a)(v) or section 40A(5) of the Income-tax Act, the entire expenditure incurred by the assessee for the maintenance of the building given for residence of its employees and the depreciation thereon can be taken into account for the purpose of disallowance under section 40(a)(v)/40A(5). Learned counsel for the assessee placed reliance on the decision of this court in CIT v. Davidson of India Private Ltd. [1984] 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent amended provisions in a broader form as contained in section 40A(5) did not fall for consideration by this court and is, therefore, not of any assistance to the point at issue. He sought to derive support from certain observations of this court in CIT v. Ashoka Marketing Ltd. [1990] 181 ITR 493. The facts in that case were, however, altogether different. The house rent was paid by the company for the flats provided to the executives. The actual rent paid by the company for the flats was known and ascertained. This court, in that context, observed that, in such cases, rule 3 of the Income-tax Rules, 1962, can have no manner of application. Rule 3 does not apply to the computation of the value of perquisite for making the disallowance un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident from the penultimate paragraph of that judgment which is set out below (at page 545) : "The finding of the Tribunal that the company will have to undertake repairs of the flats in the normal course has not been disputed. It appears that the company had taken on rent (on lease) certain flats which it had let out to its employees. In order to maintain them in good livable condition, the company incurred the expenditure in question for repairs of those flats. There is no evidence that the repairs increased the value of the flats. It is apparent that the company had to maintain the flats in good livable condition and the expenditure for repairs was undertaken to discharge that obligation. In the circumstances, it cannot be said that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
