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Issues involved: Taxability of medical reimbursement as perquisites u/s 17(2) of the Income Tax Act.
Summary: The appeal concerned the taxability of medical reimbursement received by the assessee, a salaried employee who suffered severe injuries in a work-related accident. The employer reimbursed Rs. 1,53,618 for the treatment, which the Assessing Officer (AO) deemed taxable as perquisites. The AO held that since the treatment was not in a recognized hospital, the exemption claimed by the assessee under s. 17(2) was not allowable. The AO considered the medical reimbursement as a perquisite, falling under the definition in s. 17 of the IT Act. The CIT(A) upheld the AO's decision, stating that the treatment was not in an approved hospital, making the reimbursement taxable as part of the salary. The Tribunal noted that the employer's duty is to protect and compensate employees in case of accidents during employment. The reimbursement in this case was to save the employee's life and was not a benefit or obligation under the Act. The CBDT circulars on medical treatment expenses for employees and their families do not cover treatment for work-related accidents. The Tribunal concluded that the amount received for treatment due to a work-related accident is not a perquisite and therefore not taxable. The entire amount received by the assessee for medical treatment was held to be non-taxable, and the addition made by the AO was deleted. In conclusion, the Tribunal allowed the appeal of the assessee, ruling in favor of non-taxability of the medical reimbursement received for treatment of injuries sustained in a work-related accident.
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