COMMISSIONER OF INCOME TAX Vs. RAJINDER KUMAR RAJGARHIA

JUDGEMENT

(1.) THE assessee in the present case is a partner in the firm, M/s Industrial Textile Products, Delhi, which provided him with rent - free accommodation. The question was whether this was to be treated as a perquisite in the hands of the assessee. For the asst. yrs. 1967 -68 to 1970 -71, the following question has been referred to us :

(2.) ON appeal to the Tribunal, it was urged that there was no written agreement to provide rent - free accommodation and hence there was no perquisite on the basis of a rent -free accommodation and hence there was no perquisite on the basis of a rent -free written contract. Moreover, as the firm had also been taxed by virtue of the disallowance of half the amount and the partners had also suffered tax on allocation, it was urged that the assessee could only be liable to tax on a share income under S. 67 of the Act. On the other hand, the Department contended that 50 per cent of the accommodation was used for personal purposes and hence S. 28(iv) was attracted. The Tribunal accepted the assessee's view -point and held that the amount could only be taxed in the hands of the assessee if it fell squarely within S. 28(iv) read with S. 67 of the Act. It was also held that as the amount had been disallowed in the hands of the firm, it could not be added back as a perquisite in the hands of the partner.

(3.) WE have been taken through the various provisions applicable to this case and may refer to the various provisions first.