TMI Blog1977 (10) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... T.C. No. 390 of 1974 read as follows: " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the sum of Rs. 22,000 was not includible in the hands of the assessee as perquisite under the provisions of section 17(2) of the Income-tax Act, 1961, for the assessment year 1969-70 ?" " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the sum of Rs. 50,800 was not includible in the hands of the assessee as perquisite under the provisions of section 17(2) of the Income-tax Act, 1961, for the assessment year 1970-71 ? " Another director, A.R. Srinivasan, is the assessee concerned in T.C. No. 400 of 1974 and the years in question there are the four years 1967-68 to 1970-71. The question of law referred to this court reads thus : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the sums of Rs. 3,018, Rs. 4,505, Rs. 15,929 and Rs. 15,200 were not includible in the hands of the assessee under the provisions of section 17(2) of the Income-tax Act, 1961, for the assessment years 1967-68, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t apply and whose income under the head 'salaries 'exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds eighteen thousand rupees ; (iv) any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee." Just to get an idea of how the amounts mentioned in the various questions have been arrived at, it will be useful to extract paragraph 2 of the statement of the case in T.C. No. 219 of 1974 : " The deceased assessee, now represented by his legal representative, Shri A. R. Srinivasan, was a shareholder and director of M/s. Midland Theatres Private Ltd. The assessee had current account in the books of the company and entries were made therein towards his remuneration due to be paid by the company and also towards amounts withdrawn by him for his personal use. For the assessment year 1967-68, the opening debit balance against the assessee was Rs. 50,200 and the closing debit balance was Rs. 78,241 and the average of the overdrawings by the assessee was worked out at Rs. 64,222. Similarly, for the assessment year 1968-69, the opening debit balance was Rs. 78,241 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e " and "profits in lieu of salary" defined.- For the purposes of sections 15 and 16 and of this section- . ...... (2) " Perquisite " includes ....... (iv) any sum paid by the employer in respect of any obligation which, but for such payment would have been payable by the assessee.' The authorities below have not actually relied upon the provisions of this section at all." We are in agreement with what has been stated by the Tribunal that section 17(2)(iv) has no application to any of these cases. The question is whether section 17(2)(iii) will be attracted or not, and that turns on the further question whether the assessee can be said to have derived any benefit free of cost or at concessional rate. The further condition that is necessary for the application of this section is that this benefit must be derived by the persons mentioned in sub-clauses (a), (b) or (c). It is said that the sub-clause applicable is sub-clause (a) which states that the benefit may be granted by a company to an employee who is a director thereof, and the assessees concerned were directors and it is not disputed before us that sub-clause (a) would apply. Counsel for the department contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny and they were made periodically, and they were received by Lord St. Levan for his own benefit directly or indirectly. Therefore, they were 'benefits'. The company, on the other hand, appeals once more to the plain use of ordinary words and denies that a man can fairly be said to receive for his own benefit a sum which he receives by way of loan and has to repay, and further relies on the omission of loan from a definition which refers to payment by way of dividend or interest or by way of remuneration or any other payment. The latter argument may derive some force from the contention of the Crown that a transaction of loan was just what the section was aimed at. But, perhaps, that contention had only become common form by the time this stage of the case had been reached. My Lords, here again is a question on which I find it impossible to express a confident opinion. It is indeed strange that no reference is made to a transaction of loan, and the result of holding such a transaction to be a benefit must, as learned counsel for the Crown was constrained to admit, have strange results. But I have come to the conclusion, nevertheless, that the contention of the Crown must be upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of funds from the company with an obligation to repay could be the grant of any benefit without any cost. That question does not arise before us and naturally we would not deal with it. The point to be considered is whether the receipt of the amounts by the assessee or the grant of the amounts by the company without any interest would be a receipt of any benefit without any cost. Here the question is whether the non-liability to pay any interest would be a benefit and whether what has been determined is the cost of that benefit. But this question again is not one free from difficulty, because in a way it is mingled with the further question whether the section intends to restrict the discretion of the right of a company or of any other employer to give monies to its or his employees by charging interest or by charging only nominal interest or even without charging interest. We have no doubt that this section is not intended to restrict the discretion of the right of the company to advance amounts to its employees with or without interest or at any specified rate of interest. But the question would still arise whether granting amounts of the company for the personal use of its empl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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