Avadh Behari Rohatgi, J.
1. These are five reference petitions under s. 256(1) of the I. T. Act of 1961 (the Act). They relate to the accounting years 1968-69, 1969-70, 1970-71, 1971-72 and 1972-73, In all the five references one identical point is involved. This judgment will govern them all.
2. The assessed, Shri Murli Dhar Dalmia, was an officer of Birla Cotton Spinning and Weaving Mills Ltd., Delhi. He was appointed some time in 1936. In that year, he was provided with a residential accommodation by the mills at a rent of Rs. 25 per month by virtue of his being in its employment. Since then he continued to be in the employment of the Mills and continued to occupy the residential accommodation at the same rate. He retired in 1976.
3. For the first time in the assessment year 1967-68 the ITO acting under the provisions of s. 17(2)(ii) of the Act found that the accommodation provided to the assessed by his employer was on a concessional rent. He accordingly, charged to tax the aggregate value of the perquisite at 12-1/2% of the assessed's salary from Birla Mills and after deducting Rs. 300 stated to have been paid as rent by the assessed to the employer, the balance of Rs. 7,200 was added in the income of the assessed as the value of the perquisite in each of the years in question.
4. From this order the assessed appealed. The AAC took the view that the assessed's case was governed by the Delhi Rent Control Act, 1958 (hereinafter called 'the Rent Act'). In his opinion, the assessed was a tenant to whom clause (i) of the proviso to s. 14(1) and s. 22 of the Rent Act applied. He held that it was a case of a tenancy where the premises were let to the assessed by reason of his being in the service of the landlord, Birla Cotton Mills, and that the assessed could be evicted from the premises only at the time when he ceased to be in the service or employment of the mills. As regards rent he thought that ss. 4, 5, 6 and 48 of the Rent Act did not permit the mills to enhance the rent of Rs. 25 per month except by a sum of Rs. 3 only which was the permitted increase under the Act and that too only if 'the employer cares to get the rent fixed under the provisions of the Rent Act.' In his opinion, it was not a case of concessional rent because 'the rent prevalent in mid-thirties in a place like Delhi' was not more than Rs. 25 per month. As a consequence, the AAC deleted the addition of Rs. 7,200.
5. From the order of the AAC, the revenue appealed to the Tribunal. The Tribunal reversed the order of the AAC. They held that it was a case of concessional rent and that the assessed's case was governed by s. 17(2)(a)(ii) of the Act and r. 3 (b) of the I. T. Rules, 1962. As regards the applicability of the Rent Act they were of the view that those provisions did not apply. Disagreeing with the AAC, they held that the provisions of the Rent Act were wholly inapplicable in arriving at the perquisite value of the accommodation occupied by the assessed. They agreed with the ITO that the perquisite value of the accommodation had to be determined in accordance with s. 17(2)(a) of the Act and r. 3 (b) of the Rules.
6. At the instance of the assessed, the Tribunal has referred the following question to us for our opinion :
'Whether, in view of the provisions of section 17(2), read with rule 3 (a) (ii) of the Income-tax Rules, 1962, and (b) of the Income-tax Rules, 1962, the 'fair rent value of residential accommodation provided to the applicant by the employer can exceed rent chargeable under the Delhi Rent Control Act and whether the tribunal was justified in disregarding the same while determining the value of perquisite under rule 3 (b) of the Income-tax Rules, 1962, and if the answer to this question is in the negative whether the Tribunal was justified in setting aside the order of the Appellate Assistant Commissioner ?'
7. The single question in these references is this. Was the assessed a tenant of the mill Was he protected by the Rent Act The true legal issue is whether it was a case of lease or license. In answer to a question put to him the assessed said : 'I am an employee and I occupy the house by virtue of being an employee only. When I cease to be in the employment of the company, I have to vacate the house.' This is the nature of the occupation of the assessed. He was an employee of the mills. The ITO found as a fact that the relationship of landlord and tenant had not been proved by the assessed and that the Rent Act did not apply to him as he was in occupation of the house since 1935, that is, much before the Rent Act came into force.
8. Now it is important to notice that the house occupied by the assessed was situated within the precincts of the mills. Electricity was supplied to the assessed not from any outside agency but from the generating plant of the mills. During the relevant time the assessed had risen to the position of the executive president of the mills. As an employee of the mills he was occupying the house owned by it. It seems to us that his occupation can properly be described as a service occupation. He was a service occupier or a licensee. A service occupation is only particular kind of license whereby a servant is required to live in the house in order to do his work better. The assessed's residence in the mills' premises was for the better performance of his duties. The creation of a tenancy cannot be inferred from the facts and circumstances of the case.
9. We think the ITO was right in holding that it was not a case of landlord and tenant to which the Rent Act applied. It is true that the premises mills. But from this it does not follow that the employer accepted the assessed as a tenant in 1935 at the rate of Rs. 25 per month when the premises were given to him. A large bungalow, fully furnished with free electricity, water, etc., could not be had at a rent of Rs. 25 per month even in 1935. To hold that that was the rent prevalent in the mid-thirties will be utterly wrong. The amount of Rs. 25 as rent which was deducted by the employer from the salary of the assessed was on the basis of service occupation by a licensee which was the status the employee enjoyed. Sections 4, 5, 6 and 48 of the Rent Act, which deal with the determination of the standard rent and the permitted increase, are not applicable to the assessed's case. Rs. 25 was a concessional rent. This was the finding of the ITO. It was accepted by the Tribunal and we agree with it.
10. The assessed has not filed any tenancy agreement of lease deed to prove his contention that he was a tenant who enjoyed the protection of the Rent Act. Nor has he told us the terms of his contract of service. The assessed was in occupation of a large house with 16 rooms, fitted with air-conditioners and refrigerator and other costly furniture. He was using electricity and water free of charge. In addition he had a garden attached to the house where he was having the services of a gardener at his disposal free of cost. These facts were admitted by the assessed in a questionnaire given to him to answer. It appears to us that for the better performance of his duties he occupied the premises as part of his contract of service and not as a tenant. We cannot hold that a tenancy existed in favor of the assessed.
11. In torbett v. Faulkner  2 TLR 659 (CA) Denning L. J. said :
'A service occupation is, in truth, only one form of license. It is a particular kind of license whereby a servant in required to live in the house in order to do his work better. But it is now settled that there are other kinds of licenses which a servant may have. A servant may in some circumstances be a licensee even though he is not required to live in the house, but is only perimeter to do so because of its convenience for his work-see Ford v. Langford  65 TLR 138 per Lord Justice Asquith, and Webb Ltd. v. Webb (unreported, October 24, 1951)-and even though he pays the rates, Gorham Contractors Ltd. v. Field (unreported, March 26, 1952), and even though he has exclusive possession, Cobb v. Lane  1 TLR 1037.'
12. The Lord Justice then continued :
'If a servant is given a personal privilege to stay in a house for the greater convenience of his work, and it is treated as part and parcel of his remuneration, the he is a license, even though the value of the house is quantified in money; but if he is given an interest in the land, separate and distinct from his contract of service, at a sum properly to be regarded as a rent, then he is a tenant, and none the less a tenant because he is also a servant. The distinction depends on the truth on the relationship and not on the label which the parties choose to put upon it : See Facchini v. Bryson  1 TLR 1386.'
13. The assessed was permitted to occupy the house as a licensee. We do not accept that a relationship of landlord and tenant existed between the mills and the assessed. The surrounding circumstances strongly suggest that the assessed's occupation was the occupation of a licensee and not as a tenant. The rend charged was nominal. It was only a personal privilege or license to the servant to occupy the premises for the greater convenience of his work. The master did not create any interest in the estate or house in favor of the servant. He merely gave him a personal privilege with no interest in the land. That in such like cases the officer's occupation is that of a license is exemplified by the decision of the Supreme Court in B. M. Lall v. Dunlop Rubber Co. (India) Ltd. : 1SCR23 . The Supreme Court followed Denning L. J.
14. The provision of s. 17(2) and r, 3 fully apply to the case of the assessed. He was enjoying the accommodation of the employer at a concessional rent. This appears to be a term of his service. The perquisite value of the accommodation occupied by the assessed was legally and correctly determined by the ITO. He rightly held that the provisions of the I. T. Act and the rules framed there under ought to be applied in arriving at the perquisite value of the accommodation in the occupation of the assessed. Rule 3 (b), in our opinion, furnishes a complete answer to the issue raised in these references. It says :
'The value of residential accommodation provided at a concessional rent shall be determined as the sum by which the value computed in accordance with clause (a), as if the accommodation were provided free of rent, exceeds the rent actually payable by the assessed for the period of his occupation during the relevant previous year.'
15. We are clearly of the opinion that the view taken by the Tribunal is a correct one. It is case of concessional rent.'The value of any concession in the matter of rent respecting any accommodation provided to the assessed by his employer.' is covered by the term 'perquisite' as defined in s. 17(2) of the act. Rule 3 of the Rules of 1962 provides the machinery to evaluate the perquisites for the purpose of computing the income chargeable under the hear 'Salary'. To value a tenament which is essentially a license and in which the assessed has no property of any kind in terms of the Rent Act is a fanciful notion and foreign altogether to the scope and intent of the I. T. Act. In our opinion, to a case such as the present, the Rent Act has no application.
16. Section 17(2) of the I. T. Act and r. 3 of the I. T. Rules, 1962, do not requires us to have any regard to the Rent Act. These provisions lay down their own measure, Their own yardstick, their own formula, to determine the value of a perquisite once it is held that the premises were given at a concessional rent by the master to the servant. Where there is a relationship of landlord and tenant different considerations may apply. It is unnecessary t rule on that today. In the present case we agree with the ITO and the Tribunal that it is a case of concessional rent to which s. 17 and r. 3 apply.
17. For these reason, we answer the question referred to us as follows :
1. The value of the residential accommodation was correctly determined by the Tribunal under the provisions of s. 17(2) of the I. T. Act, 1961, read with r. 3 (a) (ii) of the I. T. Rules, 1962.
2. The Delhi Rent Control Act, 1958, has no application to the case of the assessed.
3. The Tribunal was justified in disregarding the Rent Act while determining the value of the perquisite under r. 3 (b) of the I. T. Rules, 1962.
4. The Tribunal was justified in setting aside the order of the AAC.