1998 (4) TMI 161 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of reimbursement of medical expenses.
2. Taxability of perquisites.
3. Addition under the head "Income from undisclosed sources."
4. Inclusion of 1/6th share of income from the estate of the mother.
5. Addition of income from house property.
6. Deduction under section 80U.
7. Addition of foreign travel expenses of the assessee's son.

Detailed Analysis:

1. Disallowance of Reimbursement of Medical Expenses:
The assessee contested the confirmation of disallowance of Rs. 44,272 made out of the reimbursement of medical expenses. The assessee argued that the payment was a gratuitous gesture by the Board of Directors and not a contractual obligation, thus not taxable under sections 17(2)(iii) and 17(2)(iv) of the Income Tax Act. The Tribunal agreed, referencing similar cases (Smt. Asha Golcha vs. Asstt. CIT and Dy. CIT vs. P.G. Shanbagh), and concluded that the reimbursement was not a perquisite since it was not a benefit or amenity provided by the employer but a gratuitous payment to the assessee's brother.

2. Taxability of Perquisites:
The assessee filed an additional ground challenging the taxability of Rs. 3,62,124 in subsequent years as directed by the CIT(A). The Tribunal admitted the additional ground and reviewed the jurisdiction of the CIT(A) to issue such directions. Citing the Calcutta High Court decision in Mrs. R.H. Dave vs. CIT and the Supreme Court ruling in ITO vs. Murlidhar Bhagwan Das, the Tribunal held that the CIT(A) had no jurisdiction to direct the assessment of income in a year not under appeal. However, considering the provisions of section 153(3)(ii) and the necessity of such directions for resolving the issue, the Tribunal found the directions valid but ultimately held that the amount could not be taxed as a perquisite.

3. Addition under the Head "Income from Undisclosed Sources":
The assessee declared agricultural income of Rs. 78,000, which the AO reduced to Rs. 25,000, treating the balance as income from undisclosed sources. The Tribunal referred to a similar case involving the assessee's brother, where agricultural income was estimated at Rs. 50,000. The Tribunal directed the AO to reassess the agricultural income in line with the brother's case and the Tribunal's previous order.

4. Inclusion of 1/6th Share of Income from the Estate of the Mother:
The AO included 1/6th share of income from the mother's estate in the assessee's income, which the CIT(A) upheld. The assessee argued that the estate was not fully administered, and thus the income should not be included. The Tribunal found the facts insufficiently discussed and remanded the issue to the AO for re-examination and decision in accordance with law.

5. Addition of Income from House Property:
The AO added Rs. 8,500 as income from house property, which the CIT(A) upheld, directing that 1/6th of the income be taxed in the assessee's hands. The Tribunal noted the lack of clarity on whether the income was declared by the assessee and whether it was 1/6th or full income. The matter was remanded to the AO to ascertain the correct facts and decide the issue based on the ownership and assessment of the property.

6. Deduction under Section 80U:
The assessee claimed a deduction under section 80U for a heart ailment. The Departmental Representative conceded that the issue was similar to a previously decided case (Shri S.D. Batra), where the Tribunal allowed the deduction. The Tribunal followed the precedent and allowed the deduction under section 80U.

7. Addition of Foreign Travel Expenses of the Assessee's Son:
The AO added Rs. 25,000 for the foreign travel expenses of the assessee's son, which the CIT(A) deleted due to lack of evidence that the assessee purchased the ticket. The Tribunal upheld the CIT(A)'s finding, agreeing that no contrary evidence was presented.

Conclusion:
The appeals resulted in partial relief for the assessee, with some issues remanded for reassessment and others decided in favor of the assessee. The Tribunal's detailed analysis emphasized the necessity of proper jurisdiction, factual examination, and adherence to legal precedents in tax assessments.