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C.I.T. versus G.H. SINGHNIA

High Court of Judicature at Allahabad

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C.I.T. v. G.H. Singhnia - INCOME TAX REFERENCE No. 126 of 1990 [2005] RD-AH 541 (25 February 2005)


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  Court No.37

Income Tax Reference No.126 of 1990

Commissioner of Income Tax, Kanpur vs. Dr. Gaur Hari Singhania, Kamla Tower, Kanpur.

Hon'ble R.K.Agrawal, J.

Hon'ble Prakash Krishna, J.

The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court:-

"Whether on the facts and in the circumstances of the case, the appellate Tribunal was justified in holding that the valuation fixed by the A.D.M.(City) at Rs. 20,000/- per annum should be treated as the fair rental value of the accommodation for purposes of perquisite?"

The present Reference relates to the Assessment Year 1982-83.

Briefly stated the facts giving rise to the present Reference are as follows:

The respondent-assessee was a Managing Director of M/s J.K.Jute Mills Company Limited. He had been provided with rent free accommodation by the said company which is 1/3rd portion of the property known as ''Ganga Kuti', 11 Cantonment, Kanpur. This property belongs to M/s J.K.Bankers and has been let out to three officers to three companies at the licence fee of Rs. 18,000/- per annum to be shared by the three companies. The respondent had shown the value of the perquisite at Rs.6,000/-. 20% of the salary received by the respondent from the said company was 4,800/-. The Assessing Officer was of the view that the provisions of Rule 3(iii)(A)(i) of the Income Tax Rules would be applicable, and accordingly, worked out the perquisite value of the rent free accommodation provided to the respondent at Rs.28,533/- by adopting the annual letting value of the said property at Rs.1,00,000/- as originally assessed by the Cantonment Board, taking fair rental at Rs. 33,333/- being 1/3rd portion of the property which was in occupation of the respondent. It may be mentioned here that even if the annual letting value of the said property had been fixed at Rs. 1,00,000/- by the Cantonment Board but in appeal the Additional District Magistrate (City) vide order dated 21st March, 1981 had determined the value at Rs.20,000/- which has been accepted in the case of M/s J.K.Bankers. Feeling aggrieved the respondent preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) had accepted the plea advanced by the respondent and directed the Income Tax Officer to adopt the fair rental value of the property at Rs. 20,000/-, thus the share of the respondent would be 1/3rd  and then compute the perquisite. Feeling aggrieved the Revenue preferred an appeal before the Tribunal. The Tribunal upheld the order of the Commissioner of Income Tax (Appeals).

We have heard Sri Shambhoo Chopra, learned standing counsel for the Revenue and Sri R.S.Agarwal, learned counsel for the respondent.

It is not in dispute that the Assessing Authority had proceeded to determine the value of perquisite by taking the annual letting value of the property in question as determined by the Cantonment Board at Rs. 1,00,000/- The said value had been fixed in appeal by the Additional District Magistrate (City) vide order dated 21st March, 1981 and re-determined at Rs. 20,000/-. Thus, the value taken by the Assessing Authority got automatically substituted by the value of Rs. 20,000/-. Moreover it has come on record that M/s J.K. Jute Mills Company Limited had only paid Rs. 6,000/- towards rent of the 1/3rd portion of the  Ganga Kuti which is in occupation of the respondent during the year in question. The value of perquisite has to correlate with the amount of rent paid by the Company. In this view of the matter we are of considered opinion that the Tribunal has not committed any error in upholding the order of the Commissioner of Income Tax (Appeals) fixing the valuation of Ganga Kuti at Rs. 20,000/- for the purpose of perquisite.

We, accordingly, answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. However, there shall be no order as to costs.




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