COMMISSIONER OF INCOME TAX Vs. BIRLA CONSULTANTS LIMITED

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961 at the instance of the Revenue, the Tribunal has referred the following question of law to this Court for opinion :

(2.) THE relevant assessment year is asst. year 1974 75. The assessee is a company. It owns a Duplex Flat in the building known as II Palazoo, Malbar Hill, Bombay 6 covering an area of 2840 sq. ft. During the relevant previous year in terms of the resolution of board of directors of the company dt. 30th May, 1972, on and from 1st July, 1972 a portion of the said flat comprising of one bed room with common use of drawing and dining room was allowed to be used by one of its directors Shri A.V. Birla. The area of the portion occupied by Shri Birla was 1/3rd of the total area of the flat. While making assessment of the company for determining the salary, allowances, etc., paid to the directors, the ITO determined a sum of Rs. 19,210 as value of the perquisite for use of the aforesaid flat which was computed as under :

(3.) LEARNED counsel for the Revenue submits that the Tribunal was not justified in excluding depreciation from the value of perquisite. We have considered the submission in the light of the language of S. 40A(5)(a)(ii) of the Act. In our opinion, the appropriate expression which takes care of the depreciation allowance is the word 'allowance' used in the later part of the above clause. Similar controversy regarding interpretation of the expression 'allowance' appearing in S. 40(a)(v) of the Act came up for consideration before this Court in CIT vs. Yorkshire Insurance Co. Ltd. (1987) 60 CTR (Bom) 203 : (1986) 162 ITR 565 (Bom). Interpreting S. 40(a)(v) of the Act, it was held by the Division Bench of this Court :