Law:

Section:

Section 17(2) of the Income-tax Act, 1961-Salary-Perquisite-Whether value of perquisites provided by employer to assessee but not used by him is includible in income of assessee so long as he had not forgone his right to such perquisite before income therefrom accrued-Held, yes Facts The assessee, an employee of a company, was provided, inter alia, with a rent-free house, and some other perquisites by the company. In his return, he did not show any value for these perquisites on the ground that he had not utilized them. The ITO negatived this contention and included the estimated value of the perquisites in the taxable income of the assessee. The Tribunal, on second appeal, deleted the addition. On reference: Held Where income has been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, it would still be taxable. The real test in each case is whether the income has really accrued or not. In the instant case, by the provision of rent-free accommodation, income had resulted by accrual even though the assessee may not have utilized the rent-free accommodation. The statute has used the word 'provided' which means making available for the use of the assessee. There may be circumstances under which the assessee may not make use of the rent-free accommodation provided to him. Unless the assessee forgoes his right to the provision of rent-free accommodation provided to him by his employer or waives: his right before the income accrues, the notional income has to be brought to charge as a perquisite equivalent to the value of the rent-free accommodation. The ITO was, therefore, justified in including the estimated value of the perquisites as the income of the assessee and this Tribunal was not justified in deleting the addition. Case review CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 (SC) and CIT v. Bachubhai Nagindas Shah [1976] 104 ITR 551(Guj.) relied on. Cases referred to CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 (SC), CIT v. Mehar Singh Sampuran Singh Chawla [1973] 90 ITR 219 and CIT' v: Bachubhai Nagindas Shah [1976] 104 ITR 551 (Guj.). K.K. Wadhera and P.N. Misra for…

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