In many cases employees are expected to work from residences. As a matter of fact it may be a contractual arrangement. In Rotomac Globals Pvt. Ltd. v. Commissioner of Income-tax (2010) 320ITR616 a whole time director of the company operated from his residence as a matter of necessity and in the consequence received certain reimbursements for telephone, electricity expenses, watchman etc., which was disallowed by the AO labelling it as personal expenses. In this case no exact details were furnished of the amount so reimbursed for official purpose and that pertained for personal use so the AO disallowed the entire value. However since there was use of residence partly for business purpose an adhoc value is considered to be a perk.
The Tribunal thus allowed a relief of Rs.1 lac on the ground that the same value had been considered in the director's hands as perquisites. As the expenses in the hands of the company were claimed on estimated basis without adequate details the company could therefore get relief only to the extent of sum considered as perk in the hands of the director.
On the other hand if as a matter of fact a scientific valuation is made on such costs incurred in the necessary course of rendering duties of employment from residences then perhaps there can be a reimbursement of such costs without tax disadvantage to either.
The Tribunal thus allowed a relief of Rs.1 lac on the ground that the same value had been considered in the director's hands as perquisites. As the expenses in the hands of the company were claimed on estimated basis without adequate details the company could therefore get relief only to the extent of sum considered as perk in the hands of the director.
On the other hand if as a matter of fact a scientific valuation is made on such costs incurred in the necessary course of rendering duties of employment from residences then perhaps there can be a reimbursement of such costs without tax disadvantage to either.
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