JUDGMENT H. N. SETH J. - At the instance of the assessee, Lakshmipat Singhania, the Income-tax Tribunal, "B" Bench, Allahabad, has referred the following question in respect of the assessment years 1962-63, 1963-64 and 1964-65 for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal erred in holding that the rent-free accommodation of J. K. House, Calcutta, allowed by the J. K. Jute Mills Co., Ltd., to the assessee is a perquisite or benefit obtained in the relevant accounting year within the meaning of section 2(24)(iv) and its value is assessable in the hands of the assessee for the assessment years 1962-63, 1963-64 and 1964-65 ?"
The facts leading to the present reference briefly stated are that the assessee, L. Lakshmipat Singhania, was a director of J. K. Jute Mills Co., Ltd., in the years 1955-56 and 1956-57. He resigned as a director in the year 1956. Later on he was appointed as a financial adviser to the J. K. Jute Mills Co., Ltd., and was allowed free use of the companys premises known as J. K. House at 12, Alipur Road, Calcutta, vide companys resolution dated April 19, 1956. He continued to act as the financial adviser of the company during the assessement years in question. The income-tax authorities computed the value of the aforesaid perquisite enjoyed by the assessee, and included the same in his income. The claim of the assessee that, as he was enjoying the pe requisite in his capacity as a financial adviser, it did not fall within the definition of the word "income" as defined in section 2(24)(iv) of the Income-tax Act, 1961, was not accepted by the Trib unal, which at the instance of the assessee stated the case and ref erred the aforesaid question for the opinion of this court.
Section 2(24) of the Income-tax Act defines income as including, -
"(i).......
(ii).......
(iii)......
(iv) The value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person .....
(v) ......."
Accordingly, if any benefit or perquisite is derived by a person from a company, who is related to a director of the company, it would, for the purpose of the Act, be considered to be his Income. Learned counsel for the assessee contended that under his section only such perquisite which is obtained by a person as a relative of a director and not that which is obtained in consideration of services rendered to a company, which can be the treated as income and brought to tax as such. He contends that L. Lakshmipat Singhania obtained this perquisite as financial adviser. In this connection the fact that he was related to one of a the directors of the company was immaterial. Hence, the perquisite obtained by the assessee could not be treated as his income under section 2(24)(iv). We are unable to accept this submission. The section merely provides that if any relation of a director derives the benefit or perquisite from a company it will be deemed to be his income. It does not state that the income should be derived by a relation in any particular capacity. This distinction becomes obvious because of the use of the word "benefit derived by a relation of the director" instead of "the benefit or perquisite derived in the capacity of a relative of director". The benefit derived by L. Lakshmipat Singhania, therefore, clearly fell within the ambit of section 2(24)(iv) and was income of the assessee.
Next contention of Sri Upadhya, learned counsel for the assessee, is that even if the perquisite obtained by him be considered to be income within the meaning of section 2(24), it could be taxed only under one of the heads enumerated in section 14 of the Income-tax Act, 1961. Since L. Lakshmipat Singhania derived this income as a financial adviser to the company it was his income falling under the head "profits and gains of business or profession". Till the year 1964, when sub-clause (5-A) was added to section 2(24)(iv), and corresponding sub-clause (iv) was added to section 28 of the Income-tax Act, the value of such perquisite could not be brought to tax under that head. In our opinion, in the circumstances of this case, this argument has no relevance. In this case the value of the perquisite has been included in the assessees income under the head "income from other sources" and not as income from profession or business. Learned counsel then contended that, as the perquisite in question was obtained as a financial adviser, it was in fact the assessees business or professional income and no question of its being assessed as income from other sources could possibly arise. We are unable to accept this submission. The assessee never raised the question that the work of financial adviser was his business or profession before the income-tax authorities, who throughout proceeded on the basis that the value of the perquisite was his income from other sources. Merely because L. lakshmipat Singhania chose to give advice to a particular company it did not necessarily mean that giving of financial advice was his business or profession. Since the facts for bringing the case under the head "profits and gains of business, profession or vocation" were not at all made out, the question of considering whether this income was taxable under section 28 of the Income-tax Act, 1961, does not at all arise for consideration. In these circumstances we are of opinion that the income-tax authorities were justified in treating it as an income from other sources and taxing it as such.
In the result, we answer first part of the question referred to us in the negative and in favour of the department. Second part of the question, viz., whether the income was assessable in the hands of the assessee for the assessment years in question is answered in the affirmative and in favour of the department. The department is entitled to costs which we assess at Rs. 200.