D P MANDELIA Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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K.S. Viswanathan, Accountant Member -
(1.) WE dispose of these two appeals by the assessee by a common order since they involve common points. The assessee is an individual and the main source of his income is from salary. In the assessment for the years 1977-78 and 1978-79, there were two points of dispute. The first point is in respect of the perquisite value of a car kept at his disposal. The ITO had included Rs. 5,400 as perquisite value for both the assessment years. This was upheld by the Commissioner (Appeals). The assessee is on further appeal before us.
(2.) We find that this identical point had come up before the Tribunal for the assessment year 1976-77. The Tribunal, after going through the facts of the case, had held that an amount of Rs. 1,200 could be treated as perquisite value. For the reasons stated in that order, we would direct that the figure of Rs. 1,200 be substituted for Rs. 5,400 for both the assessment years.
The second controversial point arises like this. The employer of the assessee is maintaining a recognised provident fund, to which both the assessee and the employees contribute. The interest credited to this provident fund was in excess of one-third of the salary of the assessee by Rs. 25,248 for the assessment year 1977-78 and Rs. 35,046 for the assessment year 1978-79. These amounts were shown by him in the returns filed for the respective years. So, the ITO included them for the assessment. However, thereafter, the assessee appealed against its inclusion. It was submitted before the Commissioner (Appeals) that under Rule 6(6) of the Fourth Schedule dealing with recognized provident fund, two conditions are given in respect of the interest which has to be treated as income. The conditions are that the interest on the accumulated balance should exceed one-third of the salary and that the rate at which the interest is paid also should exceed the official rate. According to the assessee, these are not alternatives but cumulative conditions. Unless both the conditions are satisfied, no addition could be made. The Commissioner (Appeals), however, rejected this submission. He pointed out that if they were alternatives, the rules would contain a directive "whichever is beneficial to the assessee". In the absence of any such expression, the submission that they are alternatives has to be rejected.
(3.) THE assessee is on further appeal before us. Shri Mehta submitted that there is no dispute that the interest credited was in excess of one-third of the salary by the figures given in the assessment order. He also submitted that there was no dispute that the rate of interest was the same as the rate fixed by the Central Government in the Official Gazette. But he submitted that the two conditions mentioned in the rule have to be construed as conjunctive and not disjunctive. THE word "or" should be ascribed the meaning of "and". He pointed out that interpretation of statutes would require such a reading if the circumstances warrant. In Rule 6 itself, at the end of Clause (a) there is the word "and". This word clearly means "or". A plain reading of the rule would satisfy any one on this point. He further submitted that if the provisions in Clause (b) in Rule 6 were to be read disjunctively, certain hardships would be caused. In the case of an employee, who has agreed to work for no remuneration or for nominal remuneration, the interest credited to the balance in his provident fund could be in excess of one-third of his salary because it is quite possible that he might have been working for full remuneration in the prior years. He also submitted that the alternatives given had been deleted from the rules with effect from 1981. This shows, according to him, the intention of the Legislature in the interpretation of the section.;
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