COMMISSIONER OF INCOME TAX Vs. M K MODI

JUDGEMENT

(1.) The Income-tax Tribunal lias referred, underSection 256(1) of the Income-tax Act, the following questions of 'law inrespect of Assessment Years 1970-71 to 1972-73 :

(2.) Briefly stated, the facts are as follows :The assessee is the Managing Director of M/s Modi Industries Ltd.,Modinagar and hod been assessed as an individual for the assessment years1970-71 to 1972-73 under reference. The company provided the assesseewith rent free accommodation in Modi Bhavan No. 1.ModiNagar. Therent free accommodation consisted of two bed rooms with attached bath anddressing rooms, a living room, a store, a dining room and a kitchen. Thevalue of this rent free accommodation was declared by the assessee andestimated by the Income-tax Officer and the Appellate Assistant Commis-sioner for the three years under appeal as follows : <FRM>JUDGEMENT_356_DLT49_1993Html1.htm</FRM> The Income-tax Officer based the estimate of the value of the rent freeaccommodation at 12.5% of the salary received by the assessee in each of thethree years as a Managing Director of Modi Industries Ltd.

(3.) The assessee preferred appeals to the Appellate Assistant Commissioner of Income-tax. The Appellate Assistant Commissioner confirmedthe estimate of the Income-tax Officer on the ground that the decision ofthe Income-tax Officer and the Appellate Tribunal, Delhi Bench 'C' dated 30/04/1974 in the case of Shri M.L. Modi taking the value of theperquisite at 12.5o of the salary was made in identical circumstances forthe assessment years 1970-71 and 1971-72. In regard to the assessmentyear 1972-73, the Appellate Assistant Commissioner further observed thatthe Income-tax Officer had worked out the value of the perquisites as perRule 3(a) of the Income-tax Rules, 1962 which action was also according tohim approved by the tribunal in the said case of Shri M.L. Modi. Forthese reasons, the Appellate Assistant Commissioner held that the Income-taxOfficer was perfectly justified in taking the value of the perquisite in theshape of rent free accommodation at 12.5% of the salary received by theassessee.