Law: Income Tax Act, 1961

Section: 17

Income-tax---Salary---Perquisite---Rent-free residential accommodation provided by employer to employee---Valuation of perquisite---Fair rental value of accommodation to be determined with reference to standard rent payable under Rent Control Act---Fair rental value not to exceed standard rent--¬Word "fair" indicates that it is not prevailing market rent---Indian Income Tax Act, 1961, S.17---Indian Income-tax Rules, 1962, R.3(a)(iii). Expln. 2. On a perusal of Rule 3(a)(iii) of the Income-tax Rules, 1962, in computing the value of the perquisite of rent-free residential accommodation provided by an employer to his employee, the fair rental value of the accommodation has always to be determined with reference to the standard rent payable under the Rent Control Act applicable to the area where the accommodation is situated: The fair rental value for the purpose of the perquisite can in no case exceed the standard rent determinable on the principles laid down under the Rent Control Act. The assessing authority would have to arrive at its own figure of standard rent by applying the principles laid down under the Rent Control Act for determination of the standard rent and determine the fair rental value of the accommodation on the basis of such figure of standard rent. The expression "rent which a similar accommodation would realise in the same locality" appearing in Explanation 2 to Rule 3(a)(iii) of the Rules has to be construed only to mean the "standard rent", because no property can be expected to realise any rent higher than the standard rent as that would be in breach of the provisions of the Rent Control Act. Moreover, the expression used in Rule 3(a)(iii) is "fair rental value". The use of the word "fair" is a clear indicator that it is not the prevailing market rent but the "fair rent" which can never be more than the "standard rent". If no standard rent has been fixed in respect of the particular premises either because it is in the occupation of the owner or his employees or for any other reason and the Assessing Officer wants to adopt a figure other than the municipal valuation, he will have to determine the standard rent himself by applying the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492