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The terms completed year of use shall mean 365 days from the date of purchase of asset. For instance if a prescribed asset purchased by the employee on 15.01.2002 is resold to an employee on 17.01.2003 there shall be reduced depreciation charge for one year for arriving at the notional price under the rule. And if the price at which it is sold is lower than the notional price the difference will be taxable as perquisite. Now if the assets is sold before on 4.01.2003 no depreciation would be admissible and the entire cost shall be compared with the price at which the assets is transferred to such employee. Hence it is advisable that assets are resold to employees after completion of full year.

Educational Relief

Sub-rule (5) of new rule 3 provide for a relief upto Rs.1kPA for any educational facilities allowed to an employee for meeting educational expenses of his children. Educational facilities can be availed either in an institution owned and maintained by the employer or in any other educational institution at the choice f the employee. In either case as per the proviso to sub-rule there shall be allowed a relief as per above. The employee shall be required to submit fee bills, uniform bills, books cost etc. in support thereof.

Only in case the education is provided in an institution owned and maintained by the employer shall the value of benefit is to be ascertained with reference to the cost of education in s similar institution in or near the locality.

Moreover the words “ by reason of being in employment of that employer” are specifically included to plug cases where any benefit is directly conferred on the members of the household (as defined elsewhere in rule 3) or benefits conferred by persons other than the employer in each of which case under the new rule it shall be deemed to have accrued by reason of the employment and shall be taxable under the head salary. Also the words “ in any institution” are preceded by the words” by reason of being in employment of that employer” which further prove that the relief is admissible even with reference to education obtained in any other institution not owned and maintained by the employer.

Further it is advisable that such relief must be extended all across under a scheme and also if such payments to the educational institutions are made directly by the employer, at the request of the employee.

In the present days when it is obligatory for schools to take children living in surrounding areas there is less discretion available for the choice of school either with the employer (running educational institution) or the employee. Also an employer may maintain a school in one location but not in other locations. That should not be the limiting factor as far as other employees working at such location(s) and providing education to their children in other educational institutions.

In our view the subject relief is admissible for any subsidized education even in an institution not directly or indirectly maintained by the employer.

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