WHEELS INDIA LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Tribunal referred the following questions of law said to arise out of the order of the Tribunal for our opinion under s. 256(1) of the IT Act, 1961 :

(2.) IN computing the disallowance under s. 40(c) of the Act relating to the managing director, S. Ram, and the director, V. R. Srinivasan, the ITO, inter alia, included the actual rent paid by the assessee in respect of the rent-free accommodation provided to these persons in the sums of Rs. 13,400 and Rs. 9,000, respectively. Before the CIT(A), the assessee contended that in respect of the rent-free accommodation, only the income-tax valuation should have been considered and not the actual rent paid by the assessee. The CIT refused to accept this view. Aggrieved, the assessee filed an appeal before the Tribunal, wherein it is contended that as far as the house rent paid to the employee is concerned, it should be considered as a perquisite and that the income-tax valuation alone should be considered. The Tribunal pointed out that there was nothing in ss. 40(c) and 40A(5) of the Act to suggest that while applying the sections, it is not the actual expenditure on house rent that should be taken into account in the hands of the employer, but the perquisite value in the hands of the employee. Thus, the Tribunal rejected the assessee's claim in respect of the house rent.