1977 (10) TMI 6 - HC - Income Tax

Summary

Issues:
1. Whether the expenditure incurred on the wife of the assessee during her foreign tour constitutes a perquisite under section 17 of the Income Tax Act, 1961.

Analysis:
The judgment of the Andhra Pradesh High Court involved a case where the assessee, an officer of a company, was invited by the company to visit London and Canada for business purposes, with the company covering the expenses for both the assessee and his wife. The Income Tax Officer (ITO) added the expenditure on the wife as a perquisite to the assessee's income under section 17 of the Income Tax Act, 1961. However, the Appellate Assistant Commissioner (AAC) and the Tribunal both ruled in favor of the assessee, deleting the additions made by the ITO. The issue revolved around whether the expenditure on the wife could be considered a perquisite under section 17.

The revenue contended that the expenditure on the wife should be treated as a perquisite provided to the assessee, citing section 17 of the Income Tax Act. The section defines perquisite to include benefits or amenities granted to an employee by the employer. However, the court held that perquisites should be granted only to the employee and not to any member of the employee's family. In this case, the company desired the wife to accompany the assessee on the business tour, and the company bore all expenses related to the wife's travel. As such, the court found that the expenditure on the wife could not be considered a perquisite to the assessee under section 17.

The court distinguished the present case from a previous decision of the Madras High Court, emphasizing that in the cited case, payments were made directly to the assessee as additional remuneration. In the current case, the company specifically requested the wife's presence on the tour and covered all expenses related to her travel. The court concluded that the expenditure on the wife did not accrue as income to the assessee or constitute a benefit provided to him. Therefore, the court answered the question in the affirmative, ruling in favor of the assessee and against the revenue, with costs awarded to the assessee.