COMMDR P VASUDEVA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee. applicant in this income fax reference is a retired officer of the Indian Navy. The reference arises out of his assessment for the assessment year 1966-67 for which the relevant previous year ended on 31st March, 1966. During the previous year the assessee was employed as Secretary of the Gymkhana Club, Delhi. He received from the Gymkhana Club a salary which has been assessed at Rs. 17,2441-. He was also in receipt of a pension from the Government which has been assessed at Rs. 3,330.00 . In additional to the salary received by him from the Gymkhana Club the applicant and his wife were also provided by the club with free income-tax Officer, following the decision of the Income-tax Appellate Tribunal in the case of the assessee for the assessment year 1965-66, did not take into account in the assessment the value of the above amenity thus provided by the Club free of cost to the assessee and his wife. This order of the Income-tax Officer was revised by the Commissioner of Income-tax under Section 263 of ths Income-tax Act, 1961. In response to the notice under Section 263 it was contended on behalf of the assessee before the Commissioner that the value of the free food was not taxable as a perquisite in the hands of the assessee inasmuch as the salary paid by the Club to the assessee was less than Rs. 18,0001-.This contention was rejected, the Commissioner pointing out that the total income assessed under head "salaries" in the case of the assessee being in excesss of Rs. 18,000.00 the perquisite provided in the form of free meals to the assessee and his wife was liable to be included in the assessable income after omputing its value in accordance with law after giving the assessee an opportunity of being heard in regard to the quantum thereof.

(2.) The assessee preferred an appeal from the order of the Commissioner to the Appellate Tribunal and relied on the decision taken by a single member of the Tribunal in relation to the earlier assessment year. This appeal came on for hearing before a bench of the Tribunal which found itself unable to agree with the earlier view taken by the single member of the Tribunal. It pointed out that there was nothing in the language of Section 17(2)(iii)(c) to suggest that it is only the income received from the employer from whom the perquisite was received that should be taken into account in computing the limit of Rs. 18,0001- referred to in the said clause. According to the Tribunal the genesis of the above provision was quite simple. It was to take a perquisite only in respect of persons whose income under the head "salaries" was Rs. 18,0001- or more. It did not seen to be the intention of the legislature to impose the further restriction that the above salary should be only from the same employer who had granted the perquisite. In principle also the Tribunal saw no reason to hold differently. It, therefore, uphold the order of the Commissioner and dismissed the appeal of the assessee.

(3.) At the request of the assessee the following question has been referred to us for decision : Whether on a correct interpretation of the provisions contained in Section 17 (2) (iii) (e) of the Income-tax Act the Tribunal was right in holding that the limit of Rs. 18.0001- mentioned in the said section refers to the income from salaries from all employers and former employers put together and not the income under the head 'Salaries' received from the employer which granted the perquisite.