Taxability of compensation to pilots. - Income Tax - 1491/CBDT

INSTRUCTION NO. 1491/CBDT Dated: November 9, 1982 Reference is invited to Board's telex/telegram/letter of even number dated 11.1.1981 and to say that the matter has been considered and it has been clarified that Indian Airlines is liable to pay certain compensation to pilots employed by it in the event of the pilots being grounded on being declared medically unfit. This liability has been undertaken by the Indian Airlines under the Service Rules as elaborated by a Wage Agreement entered into with the pilots. It is with a view to providing for cover of this liability that as per the agreement with Indian Commercial Pilots Association individual policies have been taken with the insurance companies. 2. Since the liability to pay the compensation has squarely been accepted to be that of the Indian Airlines the premium is actually payable by the Indian Airlines and the reimbursement of such premia in the hands of the pilots is not to be taken as a perquisite in the individual assessments of the pilots. Instruction No. 1343 dated 29-7-1980 issued from F.No. 200/100/77-IT(AI) stands modified to this extent. 3. The question whether compensation received by a pilot in the event of his losing the flying licence is taxable is being separately considered and instructions will follow.