Law:

Section:

I. Section 40A(5) of the Income-tax Act, 1961 - Business disallowance - Remuneration etc. paid in excess of prescribed limit in case of company - Assessment year 1973-74 - Whether provision of accommodation to employee in premises belonging to company amounts to perquisite - Held, yes - Whether value of such premises would have to be taken as amount actually spent by company as expenditure on premises occupied by its employee and 5/12th of despreciation allowed in respect thereof - Held, yes FACTS-I The employee of the assessee-company had occupied the company's flat for five months. The Income-tax authorities held that the provision of accommodation to employee in the company's premises amounted to a perquisite. On reference : HELD-I The provision of accommodation to the employee in the building was tantamount to a 'perquisite' as defined in Explanation 2(b) to section 40A(5). It is clear from the language of section 40A(5) that the value of the perquisite will have to be - (a)any expenditure incurred by the assessee which results directly or indirectly in the provision of any perquisite and (b)any allowance in respect of the asset used by an employee. In the above view of the matter, the value of the perquisite would have to be taken as the amount actually spent by the assessee as expenditure on the flat occupied by its employee, and 5/12th of the depreciation allowed to the assessee in respect of the flat. II. Section 40A(5) of the Income-tax Act, 1961 - Business disallowance - Remuneration etc. paid in excess of prescribed limit in case of company - Assessment year 1973-74 - Whether house rent allowance, conveyance allowance and reimbursement of medical charges to employees by company would not be perquisites for purpose of section 40A(5) - Held, yes HELD-II In view of the decision in CIT v. Indokem (P.) Ltd. [1981] 132 ITR 125 , it was to be held that house rent allowance, conveyance allowance and reimbursement of medical charges to employees by assessee company were not perquisites for purpose of section 40A(5). III. Section 37 read with section 40A(7) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1973-74 - Whether…

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