COMMISSIONER OF INCOME TAX Vs. PADAMPAT SINGHANIA DECD

JUDGEMENT

(1.) THESE are two references under Section 256(1) of the Income-tax Act, 1961, in which the Income-tax Appellate Tribunal, Allahabad, has referred the following identical questions of law for the opinion of this court :

(2.) THE aforesaid question arises out of the Tribunal's orders dated January 17, 1981, and June 26, 1981, passed in ITA Nos. 1091 and 1919 of 1980 for the assessment years 1976-77 and 1977-78, respectively.

(3.) UNDER Section 2(24)(iv) of the Income-tax Act, 1961, the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company ... is includible in such director's income. This proposition is not in dispute and it was also not disputed that Rule 3 in terms applies to the determination of the perquisite value only in respect of the persons whose income is chargeable under the head "Salaries". It was, thus, contended on behalf of the Commissioner that the said Rule applies only to an employee even though such an employee may be a director of the company. Since the assessee was not an employee, Rule 3 could not be invoked. The relevant part of Rule 3 dealing with the valuation of the perquisite value of a vehicle is as under :