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TMI Blog2004 (1) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... rading (P) Ltd. since 1992. The company intended to diversify its business in the field of merchant banking, advising of public issue of shares, debentures, portfolio management, etc. For this purpose, it was decided by the Board of Directors to send, inter alia, the appellant to theLondonBusinessSchoolfor MBA course with specialisation in finance, which knowledge and experience would benefit the company in its business. The entire cost of higher education was borne by the company and the amount was directly paid to the University by the employer company after obtaining necessary RBI permission. 3. The employer company required the appellant to execute a bond to serve the company for seven years on return in consideration of the employer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employer company to benefit its own business; the benefit to the appellant is only incidental. The incurring of the expenditure was foremost and primarily prompted to equip the employer company to carry on business in the field of finance by having available person(s) having specialised knowledge and experience. 8. Sec. 17(2)(iv) of the Act applies in respect of any obligation of the employee met by the employer. The said section pre-supposes a pre-existing obligation, which the employee is to meet, but which is discharged by the ex-employer. In other words, if the employer had not stepped in to meet the expenditure, the employee would have been obliged to do so [CIT vs. Lala Shri Dhar (1972) 84 ITR 192 (Del)]. 9. In the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom sale of shares Dividend on shares Gain/loss from redm. of mutual fund units Dividend on units Vyaj Badla income Interest income Rs. Rs. Rs. Rs. Rs. Rs. 1999-00 3,44,316 20,989 16,48,240 59,257 2000-01 6,53,132 58,977 2,717 1,54,860 2,10,122 2001-02 2,76,980 95,361 94,491 8,72,918 1,51,295 2002-03 1,550 1,89,890 1,33,138 1,78,260 2003-04 upto 5th Dec., 03 6,78,845 1,59,822 122 1,553 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took a decision that before expanding its business in the field of financial services, which promised good scope after liberalisation, the company must train and depute some of its employees. In pursuance of this goal, a resolution was passed by the Board of Directors apprising the company and its Chairman to do whatever was needful, including sending some of its employees for study at the cost of the company, Mr. Natwarlal Gupta and Mrs. Sabita Gupta, expressed their willingness to pursue higher studies abroad and the cost was to be borne by the company. The most important condition of bearing the cost of their education abroad was that the employees on their return, must serve for 7 years in the company and in the event of not serving or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the executives viz., Mr. Natwarlal Gupta and Mrs. Sabita Gupta could not have been added in their salary as perquisite for calculation at source." The order of the CIT(A) has been accepted by the Department and has become final. In case of another employee, Mrs. Sabita Gupta, who was similarly sponsored for higher education, no perquisite has been added in her hands. Different yardsticks cannot be adopted in the case of different assessees. For the reasons aforesaid, the addition on account of perquisite under s. 17(2)(iv) of the Act calls for being deleted." 15. On the other hand, learned Departmental Representative while relying on the findings of the authority below, contended that the amount in question has actually been paid by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursue the studies. The employer has made the payment of all such school fees and other expenses for which the assessee had an individual obligation. Such a payment is fully covered by the provisions of s. 17(2)(iv) of the IT Act and is liable to be taxed as perquisites in the hands of the assessee. A prayer, therefore, has been made to reject the grounds taken by the appellant. 16. We have heard the parties with reference to material available on record and case law referred. The appellant is a specified employee whose income under the head salaries exceeds Rs. 24,000. The decision to undergo higher education abroad was taken by the employer of its own volition at the cost of the company. The appellant had agreed to the conditions befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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