K. Shivashankar Bhat, J.—In respect of the assessment years 1978-79 and 1980-81, the following question has been referred under section 256(2) of the Income Tax Act, 1961 ("the Act", for short) :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in rejecting the Revenue's ground that the difference in interest rate between Government loans and that on the loan obtained by the assessee should be treated as perquisite ?"

2. The assessee was an employee of the company called "MICO". The company advanced him certain amounts as loan free of interest for the purpose of house building. That this was the policy adopted by the company and several employees had obtained such loans is not a matter in dispute. In the course of the assessment of the assessee, the assessing authority held that the interest-free loan was a benefit which should be valued as a perquisite.

3. The statement of the case actually does not indicate the basic question which was raised by the assessee before the assessing authority as well as before the Appellate Commissioner to the effect that the interest-free loan cannot be valued as a "perquisite" under section