TMI Blog1984 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in section 28 v) and section 67 of the Income-tax Act, the rent and electricity charges paid by the firm in respect of the portion of the premises occupied by the assessee-partner as residence is liable to be taxed in the hands of the assessee as a perquisite ? " It may be mentioned, that the rent as paid for the accommodation by the firm was Rs. 11,400 in 1967-68 and 1968-69, Rs. 16,850 in 1969-70 and Rs. 18,000 in 1970-71. In addition, electricity charges amounting to Rs. 1,200 were paid by the firm in each of the years. The Income-tax Officer treated it as a perquisite. The Income-tax Officer added the entire amount in each year to the assessee's income and rejected the contention that only part of the premises was occupied as res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the various provisions first. Under section 28(iv), the income chargeable in the hands of an assessee from profits and gains of business or profession includes " the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession ". If we consider the assessee as being a businessman, then it would at first sight appear that the rent-free accommodation given to him is taxable under this provision, but a closer examination of the facts shows a somewhat different result. Section 67 sets out the manner in which a partner's share in the income of a firm is computed. The relevant portion reads as follows:- "67. (1) In computing the total income of an assessee who is a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm and the ascertainable balance has to be apportioned amongst the partners. Thus, the excluded portion under section 67(1)(a) goes into the personal assessment of the partners and only the balance is to be taxed in the hands of the firm and then apportioned again among the partners. It is the admitted case here that the value of the rent-free accommodation was not deducted from the firm's assessment and has, therefore, suffered tax being included in the taxable profits of the partnership firm. This would go to demonstrate that the amount of rent-free accommodation had already been taxed in the hands of the firm and also in the hands of the partners. If the amount had been deducted under section 67(1)(a), then it might be taxable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 67(1)(a) and taxed in the hands of the assessee or it has to be taxed in the hands of the firm and not in the hands of the assessee. It cannot be taxed both in the hands of the assessee as well as the firm. We have, therefore, to answer the question referred to us on the basis that the amount which is taxed in the hands of the firm cannot be added again to the assessee's personal income. The share of the partner has to be ascertained under section 67 and we completely agree that the Tribunal has rightly viewed this question by holding that the amount is not taxable as a perquisite in the hands of the assessee if it has also suffered tax in the hands of the firm. As the question appears to involve an arithmetical problem, it may be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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