SUHAS CHANDRA SEN, J. - (1.) THE Tribunal has referred the following question of law to this Court under s. 256(2) of the IT Act, 1961 (" the Act ") : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenses incurred by the assessee for the maintenance of bungalows taken on rent for the use by the employees for their residence did not result in the provision of any benefit or amenity or perquisite to such employees within the meaning of s. 40 (c) (iii) of the IT Act, 1961 ? "
(2.) THE reference relates to the asst. yrs. 1965-66 and 1966-67. While making the assessment, the ITO applied the provisions of s. 40(c)(iii) of the Act to the assessee in respect of the rent and maintenance of the bungalows provided to the officers of the company.
(3.) THE AAC was of the view that the provisions of s. 40(c)(iii) were amended w.e.f. the asst. yr. 1969-70, when it was provided for the first time that any expenses incurred by the employer for the maintenance of the assets used by the employees and the depreciation allowance in respect of such assets should be taken for the purpose of s. 40(c)(iii). The AAC directed the ITO to recompute the disallowance under s. 40(c)(iii) without taking into account the bungalow and maintenance expenses for the purpose.;