Is an Assessee required to compute perquisite value of rent-free accommodation by including foreign salary as well?

This Income Tax Appellate Tribunal ruling addresses whether an expatriate employee working in India must include their foreign salary when calculating the taxable value of rent-free accommodation. The Assessing Officer argued that foreign salary should be included, while the assessee had only considered Indian salary. The tribunal heard arguments regarding the proper service of notices and the merits of the case.

INCOME TAX APPELLATE TRIBUNAL
[ DELHI BENCH “E”: NEW DELHI ]

BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
(Through Video Conferencing)

ITA No. 1009 & 1010/Del/2017
 (Assessment Years: 2008-09 and 2011-12)

Mr. Kimiyoshi Muto,
Co. Rajesh Mahna & Co.
G-67, Masjid Moth,
Greater Kailash-II,
New Delhi – 110 048.
PAN : APJPM0791A
(Appellant) 

Vs.

DCIT,
Circle-70(1),
New Delhi.
(Respondent)

A N D

ITA No. 1011/Del/2017
 (Assessment Year: 2011-12)

Mr. Kosuke Kataoka,
Co. Rajesh Mahna & Co.
G-67, Masjid Moth,
Greater Kailash-II,
New Delhi – 110 048.
PAN : BITPK3852L
(Appellant) 

Vs.

DCIT,
Circle-70(1),
New Delhi.
(Respondent)

Revenue by : Shri Rajesh Mahna, Advocate.
Assessee by: Shri Ramesh Kumar, Sr. D.R.

Date of Hearing 20/04/2021
Date of pronouncement 09/06/2021

O R D E R

PER PRASHANT MAHARISHI, A.M. :
ITA. No. 1009 (Del) of 2017 :

1. This appeal is filed by assessee through his representative against the order of Commissioner of Income Tax (Appeals)–21, New Delhi, for assessment year 2008-09 wherein appeal of the assessee filed against the order of the Dy. Commissioner of Income Tax, Circle 70 (1), New Delhi, passed under Section 148 read with Section 144 of the Income Tax Act, 1961 (the Act) dated 11th March, 2015 was dismissed.

2. The grounds of appeal of the assessee shows that the assessment has been made without proper service of the notice as well as the impugned addition made is not sustainable.

3. Briefly stated the facts of the case are that assessee is an expatriate employee in India working as Managing Director in an Indian company Hakuhodo Percept Pvt. Ltd. The assessee filed his return of income on 29.07.2008 at Rs.1,04,65,703/-. The case of the assessee was re-opened under Section 147 of the Act on the ground that the assessee has shown perquisite under rent-free accommodation by considering only the Indian salary whereas, according to the Assessing Officer, he was required to compute perquisite value of rent-free accommodation by including foreign salary also.

4. Notice was issued on 19th March, 2014. In view of non-appearance by the assessee, Assessing Officer issued a show cause notice, but no response was received and, therefore, the Assessing Officer computed the value of rent-free accommodation at Rs.11,16,246/- and passed the assessment order on 11th March, 2015 assessing income of the assessee at Rs.1,15,81,949/- against returned income of Rs.1,04,65,703/-.

5. Assessee filed appeal before the ld. CIT (Appeals). The ld. CIT (Appeals) noted that he has issued three notices for hearing. However, all of them received back un-delivered with Postal remark “Left”. Therefore, in the light of repeated non co-operation of the appellant he held that assessee is a habitual defaulter, which is not acceptable. He further held that appellant is not serious about pursuing this appeal. He further held that even on the merit as no new facts were pointed out, he upheld the order of the Assessing Officer.

6. We have heard the rival contentions on this issue. Clearly, facts that emerge are that assessee is an individual, resident at that particular time,employed by an Indian company. After those years when the ld. CIT (Appeals) issued the notices, it was apparent that the assessee has already left the premises. This is also evident from the postal remark. The ld. CIT (Appeals) also dismissed the appeal of the assessee more on the aspect of non-prosecution. 

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