Case Law Details
Rent Free Accommodation cannot given by Company to its part-time director cum Employee cannot be taxed as Perquisites in the Hands of Director as he was receiving NIL Salary from Company and Similarly the Same cannot be taxed as Business Income as there was existing employees and employer relationship between assessee and Company.
As the non-furnished rent free accommodation provided to the assessee is owned by M/s POL, therefore 15% of the salary shall be taken as perquisites in the hands of the assessee. However we find that admittedly the assessee is not withdrawing any salary from the POL then in such situation it cannot be determined as per rule 3 of income tax rule. Thus it is clear that the provisions of section 17(2) are very much applicable to the instant facts of the case but the same cannot be determined under rule 3 of IT rules for the reasons as discussed above.
Similarly, the provisions of Sec. 28(iv) of the Act are attracted if the benefit of perquisites is arising to the assessee from the business or exercise of the profession. As there is no dispute that there was existing employees and employer relationship between assessee and POL then there is no question of attracting the benefit or perquisites as define u/s. 28(iv) of the Act.
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