The Commissioner Of Income Tax vs Vijay Singh
2010 Latest Caselaw 1872 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                Judgment delivered on: 9th April, 2010

+      ITA No.214/2008

THE COMMISSIONER OF INCOME TAX                      .....   Appellant

                                 - versus -

VIJAY SINGH                                         .....   Respondent

Advocates who appeared in this case:

For the Appellant          :     Ms Rashmi Chopra
For the Respondent         :     Mr Salil Kapur


CORAM:
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SIDDHARTH MRIDUL

1. Whether reporters of local papers may be allowed to see the judgment? YES

2. To be referred to the Reporter or not? YES

3. Whether the judgment should be reported in the Digest? YES

SIDDHARTH MRIDUL, J

1. This appeal by the Revenue assails the order dated 29 th June, 2007

rendered by the Income Tax Appellate Tribunal in ITA No.665/Del/2005

pertaining to the assessment year 2001-02.

2. The sole dispute raised by the Revenue in this appeal is the

upholding of the order of the Commissioner of Income Tax (Appeals) by

the Tribunal whereby the addition of Rs 27,28,000/- made by the

Assessing Officer as perquisite in the hands of the assessee on account of

interest free security deposit provided by the employer was deleted.

3. The assessee was the Managing Director of M/s Sony Music

Entertainment (India) Ltd and had been provided with accommodation at

Rockdale, Napeansea Road, Mumbai. The said accommodation was

owned by B.P. (India) Ltd and had been taken by the company on lease

for the purpose of residence of the assessee. In terms of the lease, the

rent of Rs 50,000/- per month along with interest free security deposit of

Rs 3.10 crore and additional guarantee of Rs 5.50 crore was provided by

the company on behalf of the employee. Thereafter the assessee

purchased the said accommodation for a consideration of Rs 3.12 crore

and simultaneously entered into an agreement with the employer

company for providing interest free security deposit in the amount of

Rs 3.10 crore for lease of the said accommodation by the assessee to the

employer company. In other words, out of the cost of the accommodation

of Rs 3.12 crore, Rs 3.10 crore was the security deposit from the

employer company to the assessee and all other terms and conditions of

the lease of the accommodation between the employer company and the

assessee remained the same. However, it is noteworthy that there was no

provision for additional guarantee of Rs 5.50 crore as in the case of the

lease agreement by the employer company with the erstwhile owner.

4. The Assessing Officer was of the opinion that the sum of

Rs 27,28,000/- as the notional interest on the said loan of Rs 3.10 crore at

10% per annum be treated as perquisite in the hands of the assessee. The

assessee carried this finding in the appeal and the Commissioner of

Income Tax (Appeals), on being satisfied with the explanation given by

the assessee, deleted the said addition made by the Assessing Officer.

5. The case of the assessee was that the security deposit of Rs 3.10

crore was given by the employer company to the assessee as per the terms

of the lease deed with the employer and, therefore, the same could not be

treated as an interest free loan. Further, subsequently when the assessee

resigned from the job, he refunded the entire security deposit to the

employer in terms of the lease agreement between them.

6. The Tribunal, after noticing the facts and circumstances of the case,

came to a conclusion that it was not a case that money had been given by

the employer interest free before the flat had been taken on lease and that

the interest free security deposit had been given by the employer

company for taking the flat belonging to the assessee on lease and,

therefore, it could not be treated as interest free loan. The Tribunal

further held that the assessee had also not derived any other advantage as

he had leased out the flat on the same monthly rent with the same amount

of interest free security deposit and had in fact not demanded any

additional guarantee as in the case when B.P. (India) Ltd, the erstwhile

owner had leased out the same flat to the employer company. The

Tribunal, therefore, came to the conclusion that there was no infirmity in

the order of the Commissioner of Income Tax (Appeals) whilst deleting

the addition made by the Assessing Officer and upheld the same.

7. The finding of fact arrived at concurrently by the authorities below,

do not warrant any interference by us in this appeal. No substantial

question of law arises for the consideration of this Court. The appeal is

resultantly dismissed.

SIDDHARTH MRIDUL, J

BADAR DURREZ AHMED, J

APRIL 09, 2010 dn