1988 PLP (Trib (PTD)

MUHAMMAD AZAM KHAN, (JUDICIAL MEMBER).-- These five appeals at the instance of the assessee are directed against the order of learned C. I. T. (Appeals) dated 5-3-1986 in respect of the charge years 1979-80 to 1983-84.

2. The relevant facts are that the assessee employed as General Manager of Hotel Khyber Inter-Continental, Peshawar submitted returns for the years 1979-80 to 1983-84 under the S.A.S. The same were accepted completing assessments under section 59(1). Later, however, it was discovered that the assessee enjoyed certain perquisites, which he neither declared nor the department assessed the same. Accordingly, acting under section 65 the assessing officer reopened the case. A notice, as required, was issued to the assessee, but he did not revise his returns. On the contrary, he claimed that the returns already submitted were correct in that perquisites enjoyed by him could not be evaluated to be subjected to tax, because the nature of his job was such that he was required to remain on duty round the clock and had to stay as such at the hotel premises. He claimed that without these perquisites it would not be possible for him to discharge his duties and as per terms of his employment he availed the perquisites. The assessing officer did not accept these pleas and appraised the perquisites and re-determined income. In so doing he also referred to a parallel case of Mr. Abdul Shakoor Aquil, General Manager, Inter-Continental, Rawalpindi. On re-assessment income of the assessee for the said years worked out as under:- 1979-80 1980-81 1981-82 1982-83 1983-84 Salary Rs.78,000 90,000 96,000 99,000 1,05,000 Bonus Rs.18,000 13,000 24,000 24,000 Rent free accommodation @ 15% Rs.11,700 13,500 14,400 14,850 15,750 Free Food Rs.36,000 38,230 40,500 42,750 45,000 Free Laundry Rs. 4,000 5,000 6,000 7,000 8,000 Total income Rs.1,47,000 1,64,750 1,90,900 1,87,600 1,83,950

3. The assessee preferred appeals questioning the appraisement of perquisites. Mainly he contended that the perquisites were not liable to be taxed. He said, as per terms of his employment he was eligible to these perquisites and same were part of his service agreement. He further said, without these perquisites, he would not be able to perform his duties, which required his presence at the hotel premises for 24 hours.

4. The learned C.I.T. (Appeals) also did not accept any of these pleas. He agreed with the assessing officer and upheld his action in re-opening the case under section 65 and assessing the perquisites.

5. Aggrieved, the assessee came here on further appeals. Same position was here reiterated. In addition, reference was made to Simon's Taxes, Third Edition, Taxes Act, 1970, and to clause 39 of Second Schedule, Income Tax Ordinance 1979. In referring to Simon's Taxes, he submitted that the assessee was in 'representative occupation' of the premises as by virtue of term of employment contract he was required to reside on the premises for the purpose of performing his duties, which the contract imposed on him. In that capacity he occupied the rent free accommodation the value of which could not be regarded as part of his remuneration and could not be included in his assessment.

6. A copy of the relevant provision from the Simon's Taxes has been supplied and we have had a look at the same. We are afraid the above provision is not applicable here. It appears, it is relevant only to the British system of taxes. Therefore, we are not inclined to accept the proposition advanced by the learned A.R. 7.Coming to clause 39 of the Second Schedule, it reads as under:- "Any special allowance or benefit (not being entertainment or conveyance allowance or other perquisite within the meaning of subsection (2) of section 16, specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit) "

8. The learned A.R. said the assessee was required to stay at the hotel premises for 24 hours in connection with his duties and the benefit of free accommodation and free meals etc. was extended to him for that reason. It was a kind of special allowance to meet his expenses wholly necessary to be incurred in the discharge of his duties. Accordingly, continuing he said, the perquisites stood excluded from the purview of remuneration liable to be taxed.

9. The argument is totally fallacious. Only such special benefits are not taxable as part of remuneration as do not fall within the purview of perquisites. On a plain reading of the clause, the position becomes clear and it is not required to have a hard look at it to look for any hidden meanings. Such benefits, we are aware, are offered as incentive to attract efficient hands and are common to this line of business. The extra benefit is not extended for the reason of staying at the hotel premises round the clock. Even otherwise, it may be given, if the employee elects to stay out side. But what else an employee would ask for if on the same premises in exceptionally clean environment he is accommodated alongwith his family. We are of the view that both rent free accommodation and cost free food can be evaluated as perquisites for the purpose of being subjected to tax. However, in regard to free laundry we are agreeable to think that this concession should be available by way of special benefit, as the employee may have to be dressed exceptionally clean, in accordance with the general level of over all standard. Otherwise, without such allowance, it may not be possible for the officer to keep up the requisite standard. Accordingly, we exclude the addition made for free laundry service.

10. In relation to free food, an objection was also raised to the effect that family of the assessee did not always stay with the assessee and even if this facility had to be evaluated it should be for the period during which the family remained with the assessee. We find that the record belies this plea of the assessee. He filed an affidavit, dated 29-6-1985 wherein it was stated in para. 3 that since he had to remain 24 hours on duty, his wife and two daughters had to live with him and they were entitled to free food,

11. For these reasons we do not see any force in the stand of the assessee. We have also looked through the terms of employment. Nowhere it is mentioned in the same that for the reason of being on duty for 24 hours the assessee has been given the facility of free food and free accommodation. As part of the remuneration these facilities are extended and have to be evaluated as perquisites. Clearly they fall within the ambit of perquisites. Any benefit not covered by perquisites will of course, we are quite clear, not be taxable. But13 this is not the case here. These benefits are nothing but perquisites. Accordingly, we decline to term them as special benefit attached to the job for the only reason of being on duty for 24 hours.

12. However, as already said, the benefit of free laundry appears to us necessary to be allowed in order to keep up the standard.

13. Therefore, we accept the appeals partially, directing only the exclusion of free laundry benefit.

14. SIKANDAR HAYAT KHAN (ACCOUNTANT MEMBER).--While I agree with the finding of my learned colleague, the Judicial Member, that the value of rent free accommodation and free food is liable to income-tax as it is not exempt in accordance with the provisions of clause 39 of the Second Schedule to the Income-tax Ordinance, 1979 (hereinafter called the Ordinance), it has not been possible for me to agree with his further finding that value of fee laundry provided to the assessee was exempt under clause 39 ibid. Therefore, I have been obliged to exercise my right of dissent in accordance with law with regard to finding of learned Judicial Member relating to provision of free laundry to the assessee. A separate note is anyhow called for in this case on the point of free accommodation as argument of learned A.R. of the assessee that computation of value of free accommodation be made in accordance with Rule 39 of the Income-tax Rules, framed under the Repealed Income-tax Act, 1922 (hereinafter called the Act), somehow escaped notice of learned Judicial Member and consequently he did not record a finding on it.

15. Brief facts giving rise to these appeals are that during the charge years 1979-80 to 1983-84, the assessee was a Manager of Khyber Inter-Continental Hotel, Peshawar. He is now reported to have retired. At the relevant time, apart from salary, the assessee also received benefits in the form of rent free accommodation, free food and free laundry from the management of the hotel. Initially, however, while making assessments for the charge years 1979-80 to 1983-84, value of free accommodation, free food and free laundry was not charged to tax under section 59(1) of the Ordinance. Subsequently, while proceeding under section 65 of the Ordinance, the Income-tax Officer, charged to tax the value of rent free accommodation at the rate of 15% for all the years, value of free food and free laundry. On first appeal, learned C.I.T. (Appeals) by virtue of Appeals Nos. 2435 to 2438 and 2449, dated 5-3-1986, agreed with the finding of the Income-tax Officer that the value of rent free accommodation. free food and free laundry was liable to tax. On second appeal before the Tribunal, my learned colleague, the Judicial Member, has concurred with the finding of both the officers below with regard to taxability of rent free accommodation at the rate of 15% and value of free food. However, as a finding with regard to alternative plea of learned counsel of the assessee relating to the value of rent free accommodation in accordance with relevant rule has not been recorded by learned Judicial Member, it has become necessary for me to clarify the issue.

15. The Income-tax Rules, 1982 (Part I) came into force w.e.f. the 1st day of July, 1982, [except rules 3-18, 34, 35, 48, 56 and 197, which became operative w.e.f. 1st day of July, 1983]. Since Rules 3-18, include Rules 4, 5, 6, 7, 8 and 9, which deal with the computation of the value of accommodation provided to the assessee, these Rules were applicable in the case of the assessee for the charge year 1983-84 only. In this connection, Rules 5 and 6 which cover case of the assessee are set out below:- "(5) Rent free unfurnished accommodation.-- Where rent-free accommodation is provided to an employee, there shall be included, in the total income of such employee, an amount calculated as under:- Amount to be included in the total income (a) Where the annual value of the accommodation does not exceed an amount equal to forty-five percent of the minimum of the time scale of his basic salary. Nil (b) Where the annual value some much of the amount as of the accommodation exceeds forty-five percent exceeds an amount equal of the minimum of the time to forty-five percent of the minimum of the time scale of his basic salary. Scale of his basic salary so however, that the said amount shall not exceed a sum equal to ten per cent of his salary. Provided that where there is no time scale, the [basic salary] of a particular employee against a particular post or office shall be construed to be the minimum of the time scale of basic salary. Explanation. For the purpose of this rule, free unfurnished accommodation includes electric fan, built-in-cupboards, cooking range and water heater provided under the terms of the lease. It also includes free services of watchman, gardener and sweeper in an independent house and such services on part-time basis where accommodation is provided in a block of flats or apartments. No addition on account of these benefits would be made to the rental value of the accommodation. Similarly, no addition would be made where electricity is provided by the employer from his own generators and no meters have been installed. (6) Rent free furnished accommodation --Where rent free furnished accommodation is provided to the employee, an amount equal to 5% of his salary over and above the amount determined for inclusion under rule 5 shall be added to his income. Explanation.--For the purpose of this rule, 'free furnished accommodation' in relation to rent free accommodation, includes basic furniture and furnishing, appliances for cooking, refrigeration, heating and cooling and the repairs thereof, (but does not include items of entertainment such as T.V sets, Radios, Cassette-players, etc.) in addition to facilities available in respect of 'unfurnished accommodation' under Rule 5."

17. As the assessee was provided rent free furnished accommo dation, its value should be re-determined for inclusion in his income in accordance with rules 5 and 6 of the Income-tax Rules, 1982, for the charge year 1983-84. However, in respect of the charge years 1979-80 to 1982-83, Rule 39 of the Rules under the Repealed Act was applicable to the assessee. Therefore, in respect of the said years, value of rent free furnished accommodation should be computed at the rate of 15$ of the basic salary received by the assessee.

18. My learned colleague, the Judicial Member, vide para. 9 of the appellate order, has held that value of free laundry being covered 1958 by clause 39 of the Second Schedule to the Ordinance, is exempt from tax. I, however with utmost respect beg to differ with his finding. To set the controversy at rest, clause 39 of the Second Schedule to the Ordinance is set out below:- "Any special allowance or benefit (not being entertainment or conveyance allowance or other perquisites within the meaning of subsection (2) of section 16), specially granted to meet expenditure wholly and necessarily incurred in performance of the duties of an officer or employment of profit."

19. From the careful reading of the clause, I have concluded that three conditions must be fulfilled before exemption can be allowed to special allowance or benefit under it. These three conditions are:- (i) Special allowance or benefit should be specifically paid to meet the expenses. (ii) Allowance or benefit should not be in the nature of entertainment allowance or other perquisites within the meaning of subsection (2) of section 16. (iii) Expenses should have been wholly and necessarily incurred in the performance of the duties of the office or employment of profit."

20. With a view to clinch the issue, it is also necessary at this stage to refer to the definition of salary as is given under clause (a) of subsection (2; of section 16 of the Ordinance:- (a) 'Salary' includes:- (i) any wages (ii) any annuity, pension, gratuity;, (iii) any fee, commission, allowance, perquisites or profits in lieu of or in addition to salary or wages; (b) 'Perquisite' includes.-- (i) the value of rent free accommodation; (ii) the value of any concession in the matter of rent respecting any accommodation; (iii) any sum payable by the employer whether directly or indirectly to effect insurance on the life or to effect contract for any annuity for the benefit of the assessee or his spouse or any dependent child; (iv) value of any benefit provided free of cost or at a concessional rate; (v) any sum payable by an employer in respect of any obligation of an employee,

21. Since benefits received by the assessee in the matter of rent free accommodation, free food and free provision of laundry are covered by the definition of perquisites as listed under sub-clauses (i) and'' (iv) of clause (b) of subsection (2) of section 16 of the Ordinance, the said benefits being a part of salary, were liable to tax in the hands of the assessee. In support of this conclusion, I may further add that the assessee never incurred any expenditure on laundry while performing his duties wholly and necessarily in connection with his office. In consequence thereof, he was not given any special allowance or benefit by the management of the Hotel Intercontinental. Therefore, Rule 39, stands excluded and consequently, learned counsel of the assessee has failed to establish that provision of free accommodation, free food and free laundry was exempt from tax. A necessary corollary of this conclusion is that all perquisites received by the assessee including provision of free laundry is taxable in his hands.

22. A difference of opinion having arisen between me and my learned colleague, the Judicial Member, with regard to taxability of free laundry service received by the assessee, the following question of law, which arises out of the Tribunal's order is placed before the learned Chairman I. T. A. T. for sending it to a third member with the object of evolving a majority opinion:- "Whether on the facts and in the circumstances of the case, provision of free laundry is a perquisite under sub-clause (iv) of clause (b) of subsection (2) of section 16 of the Income-tax Ordinance, 1979, and therefore, liable to tax?" ON DIFFERENCE OF OPINION This appeal has come up before me on difference of opinion having been arisen between the learned Judicial Member of Peshawar Bench and the learned Accountant Member of Islamabad Bench while they were hearing aforesaid appeal at Islamabad. It appears that the appellant, an individual, derived his income as an employee of Hotel Khyber Inter-Continental during assessment years 1979-80 to 1983-84. He has filed his return under section 59(1) of the Income-tax Ordinance for all the relevant assessment years and the I.T.O. framed the assessments accordingly. However, subsequently it occurred to the Department that certain perquisites enjoyed by the appellant were not declared by him. His assessments were, therefore, reopened and additional assessments were framed. The I.T.O. inter alia made additions of Rs.4,000, Rs.5,000, Rs.6,000, Rs.7,000 and Rs,8,000 to the total income of the appellant in each assessment year involved on account of the facility of free laundry extended to the appellant by aforesaid hotel and on appeal his order found favour with the learned C .I . T. (A). The appellant was still not satisfied and came up in second appeal before Islamabad Bench of this Tribunal. The learned Judicial Member disposed of the issue in the following words: - "However, in regard to free laundry we are agreeable to think that this concession should be available by way of special benefit, as the employee may have to be dressed exceptionally clean, in accordance with the general level of overall standard. Otherwise, without such allowance, it may not be possible for the officer to keep up the requisite standard. Accordingly, we exclude the addition made for free laundry service." The learned Accountant Member, however, did not find himself persuaded by the reasoning of learned J.M. and writing a dissenting note on this issue observed as follows:- "Since benefits received by the assessee in the matter of rent free accommodation, free food and free provision of laundry, are covered by the definition of perquisites as listed under sub-clauses (i) and (iv) of clause (b) of subsection (2) of section 16 of the Ordinance, the said benefits being a part of salary, were liable to tax in the hands of the assessee. In support of this conclusion, I may further add that the assessee never incurred any expenditure on laundry while performing his duties wholly and necessarily in connection with his office. In consequence thereof, he was not given any special allowance or benefit by the management of the Hotel Intercontinental." The learned A.M., therefore, held that the provision of free laundry was a perquisite and hence taxable in the hands of the appellant. Both the learned Members then agreed to refer to the third Member the following question:- "Whether on the facts and in the circumstances of the case, provision of free laundry is a perquisite under sub-clause (iv) of clause (b) of subsection (2) of section 16 of the income-tax Ordinance, 1979, and therefore, liable to tax?" Mr. Iqbal Naeem Pasha, the learned counsel for the appellant, firstly contended that Clause 39 of second Schedule of the Income-tax Ordinance was nothing but a Proviso to section 16(2) of the Income-tax Ordinance hence the learned Accountant Member erred in holding that the laundry expenses were amounting to a perquisites which was taxable in the hands of the appellant. Referring to subsection (14) of section 10 of the Indian Income-tax Act, the learned counsel argued that the expression 'incurred' did not mean that some amount should have gone out of the pocket of the appellant. According to him the learned Accountant Member wrongly laid emphasis on the word 'incurred' while interpreting clause 39 of second Schedule of the Income-tax Ordinance. According to him, benefit of free laundry, was simply a benefit and the same was exempt under clause 39 of the second Schedule of the Income-tax Ordinance. Mr. Pasha, the learned counsel, concluded that the learned Judicial Member came to the right conclusion as the appellant was required to maintain high standard of dressing of staff Members of the hotel. In this connection, the learned counsel for the appellant also relied upon a ruling of the Bombay High Court which is reported as (1975) 99 I T R 14, C.I.T. v D.R. Pathak. Mr. Maqbaol Hussain Shah, the learned D.R., on the other hand, contended that the learned Accountant Member had come to the right conclusion as the word 'incurred' necessarily means something going out of the pocket. I have heard both the learned counsel for the appellant as well as the learned D.R. and have also perused both the respective opinions of- my learned brothers. Since both of them have reproduced the relevant Provisions of Law, I would, therefore, refrain myself from reproducing them again and, therefore, come to the merits at once. From perusal of clause 39 of the second Schedule of the Ordinance it appears that before any exemption is claimed an assessee L must show:- (1) That such claim regarding the exemption was not allowance or benefit in the nature of entertainment or conveyance allowance or other perquisites within the meaning of subsection (2) of section 16 of the Ordinance. (2) That the amount of exemption claimed pertains to expenses which were wholly and necessarily incurred in the performance of the duties of an office, or employment. (3) That any special allowance or benefit has been specifically granted by the employer to the employee to meet such expenses. (4) That such exemption is only to the extent to which such expenses are actually incurred by an assessee. , Now let us examine all these 4 conditions with reference to the facts and circumstances of these appeals. Starting with the first condition we have to first find out as to whether the exemption claimed does not fall within the definition of perquisites as laid down by Subsection (2) of section 16 of the Ordinance. When we refer to clause (b) of subsection (2) of section 16' we find that it deals with, what in law is known, an inclusive definition. In other words it can be said that the definition of perquisites is not restricted to paras. (I) to (V) of clause (b) of subsection (2) of section 16 of the Ordinance. What this expression normally connotes in common parlance can never be a matter of much dispute. In Oxford English Dictionary it also means any casual emoluments, fee or profit attached to an office or position, an addition to salary or wages. Thus, it can be safely said that the word 'perquisite' means any benefit or profit, which is attached to an office or position, and is generally an addition to salary or wages. However, in these appeals, the question arises as to whether the laundry facility given to the appellant amounts to a perquisite? The learned Accountant Member has answered this question in the affirmative whereas the learned Judicial Member propounded just the opposite view. However, from, the opinions of both the learned Members it appears that both of them have interpreted clause (b) of subsection (2) of section 16 with reference to clause 39 of second Schedule of the Ordinance. I would, therefore, also approach the issue from the same angle. From perusal of any textbook on Income-tax Laws it appears that clause 39 of the Pakistani Ordinance or subsection (14) of section 10 of the Indian Income Tax Act are the successors of SCHEDULE D or E of British relevant Income-tax Laws I would, therefore, start my discussion with British case-law. Thus, first case which we come across and which deals squarely with this question appears to have been reported as 7 TC 176 Fergosun v. Noble. In this case a detective Sargeant in the employment of a Municipal Corporation was assessed on his salary, which included a cash allowance given to him for clothing in lieu of free supply of uniform. The clothes which were required to be purchased with the allowance had certain specification and were also subject to the approval of a superior officer. Under these circumstances the question as to whether this allowance was assessable to Income-tax was answered in the negative. The Court, however, suggested that it would only be fair to permit such detective to deduct from his income the expenditure incurred by him in making clothes suitable for his duties. This advice, however, fell on the deal ear of the legislature and even the House of Lords did not take it worthy of their Lordships consideration in a case reported as (1925) 10 TC 118, Ricketts v. Colquhowt. In this case the appellant, a Barrister, residing and practising in London, got the Readership of a certain Sessions. When he offered his income from this office for tax he deducted the cost of travelling his hotel expenses and cost of conveyance of his Robes, finally the matter came up before the House of Lords and his claim was turned down. However, this precise question again came up before their Lordships of House of Lords in case of Owen v. Pook (Inspector of Taxes) which is reported as (1969) 2 WLR

775. In this case the assessee held two part time appointments with the South West Hospital Management Committee at a distance of 15 miles from the place where he practised medicine as a General Practitioner. In his tax returns he claimed the travelling expenses to and from the hospital to the place of his permanent practice and the General commissioner allowed the same. On appeal, however, the High Court reversed the order and held that the-expenses were not incurred Ex-necessitate the appellant of his duties and were personal to him. But on further appeal the House of Lords allowed the same by a majority decision. Lord Pearce speaking for the majority of the Law-Lords reconsidered Reckitt's case (supra) and held that it was 'very unsatisfactory both in its result and in its reasoning" However in another case reported as (1983) STC 665, Mallalieu v. Drummond (Inspector of Taxes) a similar question again came up before House of Lords. Here a lady Barrister sought deduction of some amount spent on her dresses which she used to put on in discharging her duties in Law Courts but the Inspector of Taxes disallowed them and n appeal his order was confirmed by the General Commissioner but on further append the High Court allowed her claim and the Court of appeal confirmed the order of the High Court. Finally the matter was brought before their Lordships of the House of Lords who restored the order of the General Commissioners. It was observed that in rider to ascertain as to whether the money was expended to serve the purposes of the tax-payers business, it was necessary to discover the tax-payer's object in making the expenditure. Their Lordships also held that although the tax-payer's conscious motive was of vital significance in ascertaining her objects, it was nevertheless not decisive and the Commissioners were entitled to find on the facts that such tax-payer has had to wear something, one object being the provision of the clothing that she needed as a human being. Their Lordships, therefore, concluded that the expenditure was not incurred wholly and exclusively for the purposes of her profession. From perusal of this case it appears that their Lordships kept into consideration both the object the effect of the expenditure while considering the claim of the tax-payer. It further appears that their Lordships gave due emphasis to the words 'wholly and exclusively' as the fate of the case very much depended on them. Thus, in view of discussion made above it appears that even in this case where by virtue of his business or profession an assessee needs special clothes, it is the duty of the assessing officer to find out before granting exemption under clause 39 as to whether he needed them wholly and necessarily for his business or profession or he could concurrently used them for cover and comfort. In former case the exemption would apply and the expenditure on clothes or laundry would be exempted from tax but in the latter case it would not. In other words it can safely be said that in the first case it would not fall within the definition of 'perquisite' as laid down in clause (b) of subsection (2) of section 16 of the Ordinance. However, this discussion does not clinch the issue. We have still to analyse the facts of this appeal vis-a-vis conditions of clause 39 as mentioned above. Let us now revert to them. From perusal of the record it appears that as a General Manager the appellant was entitled to weekly laundry facility regarding one suit, 4 shirts and 2 trousers: It further appears that he was not given any uniform and the laundry facility was utilized by him regarding his civilian clothes which he was supposed to put on while performing his duties and also when- attending other social functions. While I agree with my learned brother, the Judicial Member, that the profession of the appellant required Internationally recognised high standard of clothing in hotel business but the facts and circumstances of this appeal suggest that the dresses to which laundry facility was extended were not required wholly and-necessarily in performing of the duties of the appellant. Thus, I find that Mallaliew's case (supra) applied with full force in the case of the appellant. Moreover, in view of discussion made above it appears that the laundry facility would amount to a perquisite as defined by clause (b) of subsection (2) of section 16 of the Ordinance. Now turning to the second condition let us mention here that I have already discussed that since the laundry facility was not meant for those dresses which were required wholly and necessarily in performance of the duties of the appellant hence the first condition of clause 39 did not apply in his case. The learned A.M. has, however, gone a step further and has held that since clause 39 has used the expression 'incurred', the laundry facility cannot be held to be falling under clause

39. Mr. Pasha, the learned counsel for the, appellant, however, argued that since the legislature used the word 'benefit' also, the expression 'incurred' should be interpreted accordingly. I have again given my serious consideration to this aspect of the matter as well. In my judgment if the word 'benefit' is read with the word 'incurred', it would mean any benefit which could be incurred. Thus, the word 'benefit' would not include the laundry service. From perusal of Owen's case (supra) it also appears that their Lordships of House of Lords granted the exemption to the claim of the assessee as he had incurred certain expenses, which were specifically reimbursed by the Hospital Committee. Similarly from Fergosun's case (supra) and Reckitt's case (supra) it also appears that in these cases also the expenditure was incurred i.e., something went out from the pocket of the assessee. In the case of Mallalieu (supra) also the expenditure was claimed as an exemption. Even in a case, which is relied upon by Mr. Pasha and which is reported as (1979) 99 I T R 14, C. I. T. v. D. R. Pathak the assessee had received some money from the Government as compensatory (city allowance). Thus, in all cases the words 'incurred in performance of duties' were interpreted to mean that the assessee had to pay something from his own pocket and which was subsequently claimed by him a, an exemption. I am, therefore, of the view that under the facts and circumstances of these appeals the appellant cannot be said to have incurred any expenses in performance of his duties. Let me also point out at this juncture that the distinction made out by their Lordships of Kerala High Court in the case reported as (1973) 92 I T R 233 A.K. Venkiteswaran v. C.I.T. regarding the expression 'in performance of duties' and 'for performance of duties' are not relevant for our purposes. However, that case revolves round its own peculiar facts. In that case the question, which came up for consideration was whether the amount of room rent paid by Government servant on the ground that the condition of service required his stay at a particular place was deductible under section l6(5) of the Indian Income-tax Act. Their Lordships of Kerala High Court under the facts and circumstances of that case came to the conclusion that the expenses incurred in the performance of his duties were not incurred wholly and necessarily in the performance of his duties. As such, I do not think that I should dilate on this issue any more. I, therefore, concluded that the laundry facility given toy the appellant could not be deemed to be an expenditure incurred by him wholly and necessarily in performance of duties. Now turning to condition No 3, it appears that the benefit of laundry services could be deemed to be a benefit which was granted to the appellant, however, it cannot be said that the same was such which would be incurred in meeting the expenses required to be incurred in the performance of the duties. Similarly the 4th condition also does not appear to be applicable in the case of the appellant as the appellant did not incur any expenses regarding which he might have claimed the exemption. Thus, in view of discussion made above it can be summarized that under the facts and circumstances of this appeal the benefit of free laundry was not exempt under clause 39 and was in fact a perquisite under sub-clause (iv) of clause (b) of subsection (2) of section 16 of the Income-tax Ordinance. I, therefore, agree with my learned brother, the Accountant Member, and answer the question referred to me in the affirmative. In view of majority decision the appeal stand disposed of accordingly. M.B.A./470/T Question answered in affirmative.