Case Law Details
The High Court of Delhi has ruled that notional interest on security deposit provided against a lease agreement cannot be taxed as perquisite in the hands of the employee.
Facts
Mr. Vijay Singh (“respondent”) was the Managing Director of M/s. Sony Music Entertainment (India) Ltd (“the Company”) during the tax year 2000- 01 relevant to Income-tax assessment year 2001- 02. The Company entered into a lease agreement with B.P. (India) Ltd for leasing a property owned by them and paid security deposit of INR 31 million besides providing additional guarantee. This property was given to the respondent as rent free accommodation.
Subsequently, the respondent purchased the property and leased it to the company while continuing to occupy the property as a rent free accommodation. The terms of the lease deed were similar to the earlier instance except that there was no additional guarantee provided by the company to the respondent.
Upon resignation from Sony India, the respondent repaid the security deposit to the Company.
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I have got House Security Deposit loan Rs100000/- in Nov, 2015 from my company and given to landlord. This was interest free loan. Company has added Rs 5395.87/- as an interest in my Form 16 for FY 2015-2016 that is taxable. Is it feasible as I am returning Rs 8333/- per month from salary from Nov 2015 onwards?