CIT Vs. C W STEEL

JUDGEMENT

(1.) The question to be answered in this reference under S.256(1) of the Income Tax Act at the instance of the Commissioner of Income Tax is:

(2.) The Rule that falls for consideration is Explanation.2 to R.3 of the Income Tax Rules, 1962, which is identical in language to R.24A of the Income Tax Rules, 1922. We have considered the contention of the assessee that income tax paid by the employer does not form part of his salary and should not be taken into account for determining the value of rent free quarters for the assessment year 1961-62 in I.T.R. No. 22/1969; and for the reasons given in that judgment, we find that the income tax paid by the employer form part of the salary, and must be taken into consideration for determining the value of the rent free accommodation for the assessment year 1962-63.

(3.) The further question is whether the use of the car, electricity charges and profession tax should also be taken into account in determining the quantum of salary of the assessee for the purpose of R.3 for computing the value of the rent free accommodation. We do not think that use of car by the assessee can be an allowance within the meaning of the definition of salary; and therefore it has to be excluded in computing the salary of the assessee for determining the value of the rent free quarters. But we are of opinion that electricity allowances and profession tax would come within the definition of the word 'salary' in the Explanation; and they have to be taken into account for the purpose of determining the value of the rent free accommodation.