IIT Not to Be Considered as Govt. Authority for Computing Perquisite Value of Rent-free Accommodation | ITAT

Case Details: ACIT vs. Indian Institute of Technology - [2024] 158 taxmann.com 457 (Delhi-Trib.)

Judiciary and Counsel Details

• • Anubhav Sharma, Judicial Member & M. Balaganesh, Accountant Member
  • Devashish Jain & Ms Kanika Jain, Advs. for the Appellant.
  • Ms Maimun Alam, Sr. DR for the Respondent.

Facts of the Case

Assessee, a university, was established under the Institutes of Technology Act 1961. It was funded by and worked under the administrative control of the Ministry of Education, Government of India.

In accordance with the IIT Statutes, every employee of the Institute may be allotted an unfurnished house within the Institute campus for residential use in which he shall be required to reside. The employee shall be charged a prescribed license fee. The amount of the license fee was decided under law and deducted by the assessee before the salary was paid to the employee.

The Assessing Officer (AO) held that the assessee was required to deduct tax on the perquisite value of accommodation provided to the employees at the rate of 15% of salary. He held that the perquisite on the accommodation provided to the employees of the assessee was to be computed in accordance with section 17(2)(ii).

Assessee argued that the taxation of employees should be equivalent to that of Central/State Government employees. The assertion was also made that the assessee levies a ‘license fee’ from employees assigned residential flats at a rate specified by the Central Government. This practice ensures uniform treatment for all employees in similar circumstances, with no preferential treatment granted. Consequently, the taxable value of accommodation provided to employees should be considered nil.

On appeal, the CIT(A) held that no perquisite value of rent-free accommodation was provided to employees and deleted the demand. The matter reached before the Tribunal.

ITAT Held

The Tribunal held that the taxpayer was an independent entity of the Government. Simply being an institution created through an Act of Parliament and relying on clauses from the IIT Act and IIT Statutes that indicate some level of control by the Central Government does not confer upon the taxpayer the status of being part of the Central Government.

Thus, the CIT(A) has fallen in error in holding that the assessee falls in the Central Government category for section 17(2).