Income Tax Appellate Tribunal - Delhi
Hyundai Heavy Ind. Co. Ltd. vs Income-Tax Officer on 30 June, 1994
Equivalent citations: [1994]51ITD34(DELHI)
ORDER
R.M. Mehta, Accountant Member
1. All these appeals are directed against the identically worded orders passed by the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961.
2. The common facts in all these appeals are that the appellants are employees of Hyundai Heavy Industries Co. Ltd. (hereinafter referred to as HHI) a non-resident company incorporated in the Republic of Korea. During the relevant previous year the appellants rendered services in India in connection with the execution of certain contracts between HHI and ONGC.
3. Returns of income were filed showing NIL income by HHI in its capacity as representative assessee and acting as an agent on behalf of its non-resident employees viz., the present appellants. In the said returns salary pertaining to the period during which services were rendered in India, was claimed as exempt from tax in the light of the agreement for Avoidance of Double Taxation between the Government of India and the Government of Republic of Korea. The said claim came to be rejected by the Income-tax Officer with reference to the relevant clauses/articles of the same agreement. He accordingly brought to tax the amount of salary after allowing standard deduction. To conclude the narration of facts vis-a-vis the question of salary it is an accepted fact between the parties that the Commissioner of Income-tax (Appeals) upheld the action of the Income-tax Officer and further appeals are pending before the Tribunal.
4. The present dispute between the parties arises out of the orders passed by the Commissioner of Income-tax under Section 263 in all these cases whereby he has opined that the assessment orders passed by the Income-tax Officer were erroneous and prejudicial to the interest of revenue as he had not subjected to tax the "Perquisite" value of the "free boarding and lodging facilities" provided to the appellants while they were working on different installations. It may be mentioned at this stage that before the Commissioner of Income-tax in the said proceedings the case on behalf of the appellants at the first instance was that the claim was not under the provisions of Section 10(14) and that being the basis on which action under Section 263 was initiated. A perusal of the orders passed by the Commissioner of Income-tax in all these cases shows that he accepted this stand, but proceeded to issue a show cause as to why the "provision of free boarding and lodging" should not be regarded as a perquisite within the meaning of Section 17 of the Income-tax Act.
5. It was argued on behalf of the appellants that no monetary value could be assigned to the benefit or gain which accrued on account of free boarding and lodging and hence the proceedings under Section 263 be dropped. The main arguments on merits can be summarised as under :-
(i) That the appellants were provided with a bunker/cubicle which was shared with others and since this under no circumstance could be let out, the rental value for purposes of determining the "perquisite" was not possible and hence no benefit could be said to have arisen to the assessees;
(ii) As the appellants had to work round the clock at the site and the employers required to provide them with essentials necessary for subsistence and monetary value of which was not capable of being determined no perquisite arose. Reference was invited to CBDT Circular No. 33, dated 1-8-1955 in support.
6. The Commissioner of Income-tax rejected the aforesaid arguments by means of identically worded orders in each case and set aside the assessments for the limited purpose of adding the value of the "benefit" which accrued on account of "free boarding and lodging". According to him, the assessees in the absence of the aforesaid facilities would have had to incur expenditure on their own account and to that extent the perquisite value was taxable under Section 17 in their hands. In coming to the conclusion the Commissioner of Income-tax relied upon the decision of the Hon'ble Allahabad High Court in the case of All India Defence Accounts Association, In re [1989] 175 ITR 494.
7. It is in the aforesaid circumstances that the present appeals are preferred before the Tribunal. The learned counsel appearing for the appellants advanced detailed arguments in support of his case and these being on lines identical to those tendered before the Commissioner of Income-tax. He, however, highlighted the following :-
(i) That provisions of Section 17(2) were not applicable;
(ii) That the appellants worked round the clock on the rigs and the provision of a bunker and food which was necessitated by the arduous nature of duties performed could by no stretch of imagination be taxed as a "perquisite";
(iii) That whereas the Commissioner of Income-tax had initiated proceedings under Section 263 with reference to the provisions of Section 10(14) he had subsequently accepted the stand taken on behalf of the appellants that said Section was not relevant and had then specifically asked them to show cause as to why Section 17 not be invoked;
(iv) That the decision of the Tribunal in the case of some of the other employees of HHI in ITA Nos. 4025 (Delhi) of 1992 and others dated 26-2-1993 had proceeded on the premise that provisions of Section 10(24) as amended were required to be considered whereas the Commissioner of Income-tax in all the present appeals had clearly excluded the aforesaid Section and restricted himself to the provisions of Section 17. In other words, the said decision of the Tribunal was not applicable to the facts of the present appeals;
(v) That the question of taxability of salary income was no doubt pending before the Tribunal, but the perquisite value of the bunker and food provided to the appellants could not be taxed even assuming that the Tribunal upheld the view taken by the Commissioner of Income-tax (Appeals);
(vi) That in the proceedings before the Assessing Officer pursuant to the orders under Section 263 no addition had been made on account of the bunker although the "perquisite value" of the food supplied had been taxed;
(vii) That to be "income" the thing which is sought to be taxed must either be money or be capable of being converted into money;
(viii) That the issue raised in the present appeals stood concluded in favour of the appellants by the decision of the Hon'ble Calcutta High Court in the case of CIT v. D.S. Blackwood [1989] 178 ITR 470 and which the Tribunal was obliged to follow there being no decision to the contrary;
(ix) That when there was a decision of a High Court which supported the view taken by the Assessing Officer then the assessment order could never be treated as being erroneous and prejudicial to the interest of revenue;
(x) That the term "perquisite" and to go further the term "income" denoted not what the assessee saved as a result of somebody else incurring the expenditure, but these referred to something which went into his pocket; and
(xi) That even on the assumption that all the arguments went against the assessee still nothing could be taxed as the "fair rental value" of a barge could not be worked out under the Income-tax Rules as the same could not be let out on rent. On the same analogy no monetary value could be attached to the food as the same could not be evaluated there being no sale thereof.
8. In support of the aforesaid arguments and in the light of the impassioned plea made for cancelling the orders under Section 263, the learned counsel placed reliance on the following decisions in addition to those which are mentioned in the preceding para :-
(1) Acharya D.V. Pande v. CIT [1965] 56 ITR 152 (Guj.);
(2) CIT v. S.G. Pgnatale [1980] 124 ITR 391 (Guj.);
(3) Wilkins (Inspector of Taxes) v. Rogerson [1963] 49 ITR 395 (CA);
(4) K.S. Gurumurthy v. ITO [1990] 35 ITD 374 (Mad.) (SMC);
(5) Kool Hedzer v. Second ITO [IT Appeal Nos. 7107 & 7108 (Bom.) of 1987] (unreported decision).
9. He also referred to Circular No. 5 of 6th September, 1950 issued by the Board to support his arguments.
10. The learned Departmental Representative, on the other hand, vehemently supported the orders passed by the Commissioner of Income-tax. The subsequent arguments advanced by him were a reiteration of the reasons recorded by the Commissioner of Income-tax in initiating action under Section 263 and subsequently directing the Assessing Officer to subject to tax the perquisite on account of free boarding and lodging. He made a specific reference to the decision of the Tribunal in the case of some of the other technicians of HHI in ITA No. 4025 (Delhi) of 1992 (supra) whereby the action of the Commissioner of Income-tax under Section 263 came to be upheld. It was urged that since the facts of the present appeals were identical the Tribunal be pleased to confirm the orders passed by the Commissioner of Income-tax under Section 263.
11. We have examined the rival submissions and have also perused the material on record to which our attention was invited. The decisions cited at the bar have also been considered. At the outset, we would like to refer to the decision of the Tribunal in the case of some of the other technicians of HHI (supra) and which the learned Departmental Representative has relied upon. The Tribunal has referred to the "amended provisions" of Section 10(14) effective 1-4-1989 and taken note of their non-consideration by the Assessing Officer. In the matters before us, however, the Commissioner of Income-tax has categorically held in his orders under Section 263 that provisions of Section 10(14) are not applicable and the matter was required to be examined from the angle whether "provision of free boarding and lodging" tantamounted to a "perquisite" within the meaning of Section 17 of the Income-tax Act. Then again, certain reported decisions to which our attention was invited during the course of hearing of the present appeals were not considered by the Tribunal in the connected appeals as these apparently were not cited by the parties before it. Initially we were inclined to follow the order of the Tribunal in ITA No. 4025 (Delhi) of 1992 and uphold the action of the Commissioner of Income-tax, but were subsequently persuaded to hear the parties at length and decide the matter on merits.
12. Before we proceed further we would like to make it clear that we do not propose to take up the question whether provision of lodging would amount to a "perquisite" as it is not disputed between the parties that in the subsequent proceedings before the Income-tax Officer pursuant to action under Section 263 no addition has been made. The issue, therefore, would be academic. We would, therefore, confine ourselves to the question of "perquisite" vis-a-vis free boarding.
13. At the outset, we would like to advert to the dictionary meaning of the expression "perquisite" as under :-
(i) Any casual emolument, fee, or profit attaching to an office or position in addition to salary or wages.
(The Oxford English Dictionary, 2nd Edition, Vol. XI, page 589).
(ii) A privilege, gain or profit incidental to an employment, in addition to regular salary or wages.
(Webster's Third New International Dictionary, 1971 Edition, Volume II, page 1685).
(iii) Emoluments or incidental profits attaching to an office, or official position beyond the salary or regular fees.
(Black's Law Dictionary, 4th Edition, page 1299).
These definitions may now be considered in the light of certain reported decisions the first being of the Hon'ble Gujarat High Court in the case of Acharya D. V. Pande (supra). That was a case in which the assessee was the Acharya of a religious institution which possessed temples and other properties and received income therefrom. The followers of the Acharya paid a permanent religious tax to the institution and in addition it gave to the Acharya a voluntary contribution in the form of "Salutation tax" and presents. The assessee agreed to treat the aforesaid items as the income of the institution in return for a permanent personal allowance. In a scheme framed subsequently by the Hon'ble High Court it was provided (i) that the assessee be entitled to set aside for his personal use a sum of Rs. 2,000 p.m. from the trust income; and (ii) that expenses of his house-hold viz., residence, food, clothing, servants, etc., would be defrayed by the institution. The tax authorities treated both the items as the income of the assessee. On a reference at the instance of the assessee, the High Court upheld the action of the tax authorities in respect of the first item, viz., the cash receipt of Rs. 2,000 p.m., but answered the question in favour of the assessee on the taxability of the amount expended by the trust towards residence, food, clothing, etc. Their Lordships discussed the English and Indian cases on the subject in coming to the conclusion that they did. We reproduce herewith relevant extracts from the judgment as under :-
That takes us to the next question relating to the household expenses defrayed out of the funds of the institution. The contention on behalf of the assessee in regard to this question was that when the trust defrayed the household expenses out of its funds, no benefit in the shape of money or money's worth was received by the assessee and no income could, therefore, be said to have accrued to the assessee which would be liable to be taxed in his hands. This contention involves a consideration of the question as to what is income and when can a benefit or advantage received by an assessee be said to be income. What is the natural connotation of income is, however, nowhere to be found in the Income-tax Act. The Income-tax Act merely describes sources of income and prescribes the methods of computing income, but what constitutes income, it discreetly refrains from saying. The decided cases of course declare that "income" is a term of formidably wide and vague import and it is a word difficult and perhaps impossible to define in any precise general formula. But, howsoever broad may be the connotation of the word 'income', one thing is clear that income for tax purposes must be money or money's worth. It is not necessary that income must be received in cash. It may also be received in kind but that must represent money's worth, that is, something which is capable of being converted in terms of money. As observed by Lord Halsbury L.C. in Tennant v. Smith, 'income' includes anything capable of being turned into money from its own nature. Of course there are certain things which are not capable of being turned into money from their own nature and yet they have by statute been artificially deemed to be 'income', but the general principle is clear that income must be money or money's worth. There must be, as observed by the Privy Council in Raja Raghunandan Prasad Singh v. CIT, "an actually realised or realisable profit or loss,'. If, therefore, a benefit or advantage is received by an assessee, he would be assessable in respect of the value of such benefit or advantage if it consists of money or money's worth. Where the benefit or advantage consists of money, there is no difficulty, but where it does not consist of money, the test would be, is it something capable of being turned to pecuniary account ? If it is, then its value would be the income of the assessee.
** ** ** That leaves only one decision before we go to the facts of the case and that decision is the one reported as Daly v. Commissioner of Inland Revenue. This is rather an important decision for it bears a fairly close analogy to the facts of the present case. The assessee in this case was the priest-in-charge of a Roman Catholic Mission in the Archdiocese of Glasgow. The income of the mission was mainly derived from offertories and other contribution(s) by Church members which the Ordinances of the Roman Catholic Church in Scotland deem to be the property of the Church and not gifts to the priest, but out of the which the priest will receive what is needed for his 'seemly maintenance'. The income of the Mission was paid into a bank account in the names of the assessee and his Archbishop and normally all the expenses of the mission were met by cheques drawn on this account by the assessee. Included amongst these disbursements was a salary of £ 50 to the assessee, which was admittedly chargeable to income-tax and household expenses, viz., food, drink, fuel, wages, etc., incurred at the presbytery house where the assessee, in accordance with the regulations of the Archdiocese, lived communally with three curates. The question which was raised was whether the assessee was liable to be assessed in respect of the value of his maintenance at the presbytery house. The test whether the benefit received by the assessee was money or money's worth, that is, something which could be turned to pecuniary account, was applied and it was held that the assessee was a trustee of the revenues of the mission and since maintenance was received by him in kind and was not capable of conversion into money, it was not assessable to income-tax.
** ** ** This being the test to be applied, let us see whether in the present case, the benefit received by the assessee were money or money's worth. They were obviously not money and it was also not contended that they were such. But it was argued on behalf of the revenue that the benefits certainly represented money's worth. This proposition was disputed on behalf of the assessee and what we are, therefore, called upon to consider is whether these benefits received by the assessee were money's worth in the sense that they were capable of being converted into money or could be turned to pecuniary account.
** ** ** The learned Advocate General relied on the language of Clause 16, Sub-clause (i) and contended that the expenses which were to be met out of the funds of the institution were the expenses of the household of the assessee and the assessee, therefore, got the benefit of these expenses being met by the institution and this benefit constituted money's worth as in the case of Nicoll v. Austin. This contention is in our opinion not well founded and stands answered by the observations of Lord Hannen and Lord Macnaghten in Tennant v. Smith. It is no doubt true that the assessee got the benefit of these expenses being met out of the funds of the institution in the sense that if these expenses had not been defrayed out of the funds of the institution, the assessee would have had to incur them but, to use the words of the learned Law Lords, the assessee is chargeable 'not on what saves his pocket but on what goes into his pocket'.
** ** ** But what Clause 16, Sub-clause (i), provides is that the expenses of the household of the Acharya, that is, the expenses necessary for providing food, clothing, servants, horses, carriages and elephant for the Acharya and the members of his household, shall be incurred and met by the institution. The institution is to incur the expenses in connection with the various matters relating to the household of the Acharya such as providing food, clothing, servants, horses, carriages, elephant, etc. This obligation is founded on the basic principle of the faith that the Acharya is a fundamental part of the institution and the obligation to maintain the Acharya is, therefore, a duty laid upon the institution....
** ** ** The case, therefore, in our opinion stands on the same footing as the case of the priest-in-charge in Daly v. Commissioner of Inland Revenue. The benefits received by the Acharya by reason of the institution providing residence, food, clothing, servants, horses, carriages, elephant, etc., for the Acharya and the members of his household and incurring expenditure which can be turned to pecuniary account. The question whether the benefits are capable of being turned to pecuniary account is a question which must be judged as a whole and so judged, it is to our minds clear that they are incapable of being converted in terms of money and cannot, therefore, be regarded as income assessable to tax in the hands of the assessee.
** ** ** According to Their Lordships benefit or advantage denoted money or money's worth and an assessee was chargeable or not what he saved but what went into his pocket.
14. In the other decision of the Hon'ble Gujarat High Court, namely, S.G. Pgnatale's case (supra). Their Lordships were considering the question whether living allowance paid to the assessee who was a foreign national being the employee of a French company was taxable as a "perquisite" within the meaning of Section 17(2). This is what Their Lordships observed :-
The principle is well-recognised in the House of Lords' decision in Owen v. Pook (Inspector of Taxes) [1969] 74 ITR 147, that a perquisite is something which arises by reason of a personal advantage but the word 'perquisite' would not apply to a mere reimbursing of necessary disbursement.
** ** ** Hence, even in the ordinary meaning of the word 'perquisite', this particular allowance would not be embraced. Under Section 17(2), the word 'perquisite' has been defined by an inclusive definition and it is well-settled law that when there is an inclusive definition the ordinary meaning of the word prevails over and above the ordinary meaning, the words of the inclusive definition would also if the purpose of that particular statute, be included in that definition. We are, therefore, not concerned in the present case with the definition of 'perquisite' as set out in Section 17(2) because it is obvious, as the Income-tax Appellate Tribunal has pointed out, that the living allowance paid to the assessee in the instant case is not covered by any of the Clauses (i) to (v) of the inclusive definition in Section 17(2). It may be said, as was sought to be urged by Mr. Raval, that this was the sum paid by the employer in respect of an obligation which amount, but for the obligation, would have been payable by the assessee. If it is not perquisite even in the ordinary sense of the word, then, it cannot fall under the word 'salary' as defined in Section 17(1)(iv) because it is neither a fee, commission, perquisite nor profit in lieu of or in addition to any salary or wages.
** ** **
15. No doubt the above decision pertains to the amount actually received in cash by an employee, i.e., living allowance, but the observations of Their Lordships throw considerable light on the question before us viz., "perquisite" within the meaning of Section 17(2). It has been in fact canvassed before us by the learned counsel that free boarding made available to the present appellants cannot be subjected to tax under any of the sub-clauses of Section 17(2).
16. Then again the learned counsel relied on the decision in the case of Wilkins (Inspector of Taxes) (supra) the facts of which were that the director of a company decided to offer as a gift to each of its employees a suit, overcoat or raincoat made to order by a tailor as a Christmas present. Under the aforesaid gift scheme, an employee of the company could visit the tailor and get himself fitted for a suit, raincoat or overcoat as he liked up to a value of £ 15 and the bill was to be sent to the company. The taxpayer in this case received a suit costing £ 14.15. and the said sum was included in his assessment as part of "perquisites or profits" arising from the employment.
17. The taxpayer appealed to the Special Commissioners, who held that the amount to be included in his assessment was not £ 14.15 s., but the value of the suit in his hands, on the footing that he could immediately sell it as "second-hand". The value arrived at was accordingly £ 5. On the matter being further carried to the House of Lords by the revenue the view taken by the Special Commissioners was confirmed. The conclusion of the Law Lords is appropriately summed up in the headnote appearing at page 396 of the report as follows :-
That the taxpayer never acquired any rights either against his employers or against the tailor supplying the suit and that this was not a case where the taxpayer was entitled to call on his employers to pay a sum of money on his behalf. Until the taxpayer received his suit, he got nothing and when he received it, the thing he received expressed in money's worth was the value of the suit - viz., what he could get for it if he sold it as soon as he received it and it was on that value (£ 5) that he was taxable under Schedule E.
18. The aforesaid decision was relied upon by the learned counsel for the proposition that even on an extreme view being taken against the appellants nothing could be taxed in respect of the food given to them since the same did not have any reliable value and nothing in terms of money could be attached thereto.
19. The next decision relied upon was that of the Hon'ble Calcutta High Court in the case of D.S. Blackwood (supra). The learned counsel in fact sought to draw a comparison between the facts of that case and the facts as prevailing in the present appeals. It was canvassed before us that food was provided to the appellants as a necessary requisite of the arduous duties performed by them round the clock on a rig situated many miles on the high-seas and it was not possible for the appellants to obtain such food at such a situation from any other source. According to the learned counsel, the provision of food under the aforesaid peculiar circumstances could not be termed as a "perquisite" within the meaning of Section 17(2). We have perused the aforesaid decision of the Hon'ble Calcutta High Court and do find that it supports the stand taken on behalf of the appellants. To recapitulate the facts in that case the assessee was an employee of a company in U.K. which was entrusted with the work of erection of gas turbines at certain places in West Bengal consequent to an agreement with the State Electricity Board. The assessee came to India from time to time to supervise the erection work and while staying in India he was provided with rent-free accommodation by the foreign company. The Income-tax Officer added a sum of Rs. 40,111 as a perquisite under Rule 3 of the Income-tax Rules, 1962, but which on further appeal came to be deleted by the Commissioner of Income-tax (Appeals) on the ground that the same was exempt under Section 10(14). On further appeal, the Tribunal upheld the view taken by the Commissioner of Income-tax (Appeals) and on a further reference preferred by the revenue the Hon'ble High Court confirmed the order of the Tribunal observing in the process as under :-
Here, the assessee was provided with rent-free accommodation by his employer while he was on tour in India. It has been found by the Tribunal as a fact that the rent-free accommodation was provided by the foreign company to the assessee necessarily for the discharge of his official duty for which he was sent to India. He visited India several times between May 1977 and March 1980. The assessee was not occupying the rent-free accommodation by virtue of his posting as an employee of the foreign company in Calcutta. It is in connection with his official duty for the purpose of supervising the erection of gas turbine at Calcutta, Siliguri and Haldia that the assessee had to visit these places. Such visits are in connection with his official duty in the premises, the expenditure which has been incurred must be held to be wholly and exclusively incurred for the purpose of performing his official duties. This expenditure, on these facts, cannot be treated as a benefit given to the assessee.
20. No doubt, the aforesaid decision pertains to the provisions of Section 10(14), but applies to the facts of the assessee's case insofar as it high-lights the fact that expenditure in connection with performance of official duties cannot be treated as a benefit given to the assessee. On the aforesaid analogy the appellants in the present appeals came to India for working on the rigs and the provision of food to them was intimately connected with the performance of their official futies and on the facts of the present case the appellants had no alternative arrangement and nor was it possible or feasible for them to be transported frequently from the rights to the shore for par-taking of food etc. The aforesaid decision of the Hon'ble Calcutta High Court has been relied upon by the Bombay Bench of the Tribunal in the case of Kool Hedzer (supra). In the same decision there is a reference to the decision of the Hon'ble Gujarat High Court in case of S.G. Pgnatale (supra) as well.
21. The next decision to which we would like to refer is that of the Madras Bench of the Tribunal in the case of K.S. Gurumurthy (supra) and which has been relied upon for the proposition that where there is a decision of the High Court taking a particular view then the assessment order passed by the Income-tax Officer which is in conformity with the aforesaid view cannot be erroneous or prejudicial to the interest of revenue. This argument by the learned counsel has been tendered vis-a-vis the decision of the Hon'ble Calcutta High Court in the case of D.S. Blackwood (supra) and which according to him deals squarely with the issue raised in the present appeals.
22. At this stage we would like to refer to the decision of the Hon'ble Allahabad High Court which has been relied upon by the Commissioner in his orders passed under Section 263. This is the case of All India Defence Accounts Association (supra). The issue before the Hon'ble High Court was whether certain types of allowances primarily those paid in cash to the employees were taxable within the meaning of Section 17 of the Income-tax Act, 1961. To mention some of these allowances they are Dearness Allowance, City Compensatory Allowance, House Rent Allowance etc. There is also a reference to leave encashment, reimbursement of tuition fees and night-allowance granted to Loco-running staff. No doubt, the issue was decided against the petitioner, but this is what Their Lordships had to observe insofar as the question of "perquisite" was concerned :-
Perquisite' is an advantage received by the holder of an office over and above the salary. Any benefit received incidental to employment in excess of salary is a 'perquisite'. Perquisite postulates relationship of employer and employee. Perquisite is a benefit attached to the office. We have no hesitation in holding that city compensatory allowance, house rent allowance and dearness allowance are benefits attached to an office and incidental to the employment. 'Perquisite' is what is received by an employee over and above the salary. Any additional benefit incidental to employment is a perquisite.
23. In our opinion the aforesaid decision of the Hon'ble High Court is distinguishable insofar as the facts of the present appeals are concerned where the main question before us is whether provision of food to the appellants on the rig in the course of the performance of their official duties tantamounted to a "perquisite" within the meaning of Section 17(2). This is in contradistinction to the issue of cash allowances which was being dealt with by the Hon'ble High Court. Then again, the provision of food etc. does not fall under the category of a taxable perquisite even on the basis of the aforesaid observations of the Hon'ble Allahabad High Court.
24. It is abundantly clear from the discussion in the preceding paras that the provision of food to the appellants in the course of the performance of their official duties on the rig in the high-seas where they are expected to be on call round the clock does not tantamount to a "perquisite" within the meaning of Section 17(2) and even if one were to take a view to the contrary and in favour of the revenue it would still not be possible to attribute any money value thereto since the food provided is not a saleable commodity on the part of the appellants. On the peculiar facts of the present case we have no option, but to hold that nothing can be taxed on account of the provision of food to the assessees. The decisions cited at the bar by the learned counsel and relevant extracts thereof having been reproduced by us earlier in our order wholly support the view-point canvassed.
25. We now take up for consideration the other issue and that being whether the action under Section 263 was warranted on the part of the Commissioner and whether the assessment orders passed by the Income-tax Officer were erroneous and prejudicial to the interest of revenue. At the outset, we were inclined not to deal with this matter since the net result of our decision vis-a-vis the taxability of the two items as "perquisite" was that nothing was required to be added on account of boarding and insofar as the addition on account of lodging was concerned, the Income-tax Officer in the subsequent proceedings pursuant to orders under Section 263 had himself not made any addition and insofar as the present appeals were concerned the issue was purely academic.
26. A perusal of the orders passed by the Commissioner of Income-tax (Appeals) shows that action was initiated on the ground that the Income-tax Officer while completing the assessments had omitted to take into account the benefit/perquisite arising to the assessee as a result of the provision of "free boarding and lodging facilities". According to the Commissioner these were required to be taxed and that is what he directed the Income-tax Officer to do after hearing the assessee and perusing the material on record. No doubt, there may be certain decisions of the Courts which may support the stand taken on behalf of the assessee on merits, but it cannot be disputed between the learned counsel that the issue is definitely debatable. There is nothing in the assessment orders which would go to show that this aspect of the matter was examined by the Income-tax Officer with reference to the facts of the case. It is another matter that in the subsequent proceedings nothing was taxed on account of lodging and the Tribunal by the present order upheld the stand taken on behalf of the appellants that on the facts and in the circumstances of the case no amount was required to be added on account of the provision of food within the meaning of Section 17(2). We, therefore, uphold the action of the Commissioner under Section 263, but on merits, hold that nothing is required to be taxed in respect of the provision of food to the assessees. As already stated earlier, we do not adjudicate upon the question whether provision of free lodging was a taxable perquisite as in the subsequent proceedings the Income-tax Officer has not made any addition. We would further like to make it clear that the present decision of the Tribunal would in no way prejudice the proceedings which are stated to be pending before the Tribunal in respect of the various employees of HHI on the question whether salary income is taxable for the period during which services were rendered by them in India and which they claimed as exempt from tax in India in the light of the provisions of the Agreement for Avoidance of Double Taxation between the Government of India and the Government of the Republic of Korea.
27. In the result, all the appeals are partly allowed.