COMMISSIONER OF INCOME TAX Vs. D S BLACKWOOD

JUDGEMENT

(1.) The assessee is a permanent employee of John Brown Engineering (Clyde Bank) Ltd., Scotland, U. K.The said concern was entrusted with the work under an agreement with the West Bengal State Electricity Board for erection of gas turbines at Kasba (Calcutta), Siliguri and Haldia. In connection with the aforesaid work, the U. K. firm deputed the assessee-engineer to India, from time to time, to superwise the erection work. While staying in India the assessee was provided with rent-free accommodation. The Income-tax Officer was of the opinion that the rent-free accommodation provided by the foreign company was in the nature of a perquisite. He, therefore, added a sum of Rs. 40,111 as perquisite under rule 3 of the Income-tax Rules, 1962. When the matter went up in appeal before, the Commissioner of Income-tax (Appeals), he deleted the addition of Rs. 40,111 on the ground that the assessee was on tour to India and the benefit of rent-free accommodation was exempt under Section 10(14) of the Income-tax Act, 1961. The Revenue preferred an appeal before the Tribunal and there was a difference of opinion and ultimately by a majority decision the Tribunal upheld the view taken by the Commissioner of Income-tax (Appeals). On those facts, the Tribunal has referred the following question under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1979-80 :

(2.) Section 10(14) of the Income-tax Act, 1961, provides that in computing the total income of a person, any special allowance or benefit, not being in the nature of entertainment allowance or other perquisite within the meaning of Clause (2) of Section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, to the extent to which such expenses are actually incurred for that purpose, shall not be included.

(3.) Here, the assessee was provided with rent-free accommodation by his employer while he was on tour in India. It has been found by the Tribunal as a fact that the rent-free accommodation was provided by the foreign company to the assessee necessarily for the discharge of his official duty for which he was sent to India. He visited India several times between May, 1977, and March, 1980. The assessee was not occupying the rent-free accommodation by virtue of his posting as an employee of the foreign company in Calcutta. It is in connection with his official duty for the purpose of supervising the erection of gas turbines at Calcutta, Siliguri and Haldia that the assessee had to visit these places. Such visits are in connection with his official duty. In the premises, the expenditure which has been incurred must be held to be wholly and exclusively incurred for the purpose of performing his official duties. This expenditure, on these facts, cannot be treated as a benefit given to the assessee.