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TMI Blog1995 (3) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,08,311. Besides the aforesaid expenditure, a sum of Rs. 41,689 was spent on travelling of Sri G.S. Raju who accompanied him. These amounts were brought to tax in the two years under consideration as in the opinion of the Assessing Officer, they are perquisite within the purview of section 17(2)(iv) of the Income-tax Act. The year-wise details are as under : Particulars A. Y. 1984-85 A. Y 1985-86 Total Rs. Rs. Rs. Medical expenses 2,54,244 54,067 3,08,311 Expenses of G.S.Raju 21,987 19,702 41,689 ----------------- --------------- ----------------- 2,76,231 73,769 3,50,000 ------------------ ---------------- ------------------ 4. The CIT (Appeals) deleted the addition by referring to the decision of the Delhi High Court in thecase of CIT v. Lala Shri Dhar, [1972] 84 ITR 192, and in the case of CIT v. Vinay Bharat Ram [1981] 129 ITR 128 (Delhi), wherein it was held that the assessee having not taken voluntarily the insurance policy and it was the employer company which took the policy in order to meet the contingency of paying compensation for injuries or death, the annual premium paid by the employer company could not be assessed in the hands of the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perquisite by way of any additional imposement which the Assessing Officer has chosen to impose. It was further stated that nothing was received either by way of perquisite or additional remuneration ; nothing was saved by way of expenditure which he would have otherwise incurred ; and, therefore, taxing of the amount by treating the same as his income would not arise. The Board resolutions referred to by the assessee are quoted hereunder: Resolution dated 30-1-1984 : " Whereas Mr. P.G. Shanbagh is the Director of the Company whose services are considered very important and vital for the business of the company ; AND Whereas the said director Mr. P.G. Shanbagh has been suffering from cardio-vascular disease, which requires a special surgery but the said Director has declined to have such a treatment and decided to undergo treatment on his own expenditure at a local medical Institute." Resolution dated 13-2-1984 : " Resolved that subject to the consent of the company pursuant to section 314 of the Companies Act, 1956, sanction is hereby accorded for the Board of Directors incurring an amount up to Rs. 3.5 lakhs of the medical treatment of Sri P.G. Shanbagh, Director, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be an obligation of a person other than the assessee. In these circumstances, in our opinion, therefore, the payment is made by the employer in respect of an obligation of the assessee and, therefore, condition No. (ii) is also satisfied. When to keep oneself medically and physically fit is a personal obligation of an assessee, the expenditure so incurred would also have to be met by him personally and if it was not paid by the employer, it would have been payable by him. The assessee would have paid the same. In these circumstances, the expenditure met by the employer, in our opinion, would partake of the character of perquisite in the hands of the assessee and the assessee would be liable to pay tax on the amount of expenditure incurred by the employer for his treatment in the USA. The total expenditure as aforesaid is Rs. 3,50,000 in the two years under consideration. It includes a sum of Rs. 3,08,311 (Rs. 2,54,244 for assessment year 1984-85 and Rs. 54,067 for assessment year 1985-86) as medical expenses. The other expenditure of Rs. 41,689 (Rs. 21,987 for assessment year 1984-85 and Rs.19,702 for assessment year 1985-86) relates to the travelling of Sri G.S. Raju who accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termining the issue under consideration. 10. The CIT (Appeals) has referred to many decisions rendered in the context of applicability of section 40(c)(iii) and/or section 40(a)(v)/40A(5) and held that the language of " perquisite " being similar to that as it appeared in section 17(2), they would be applicable and cover the case of the assessee. In our opinion, that is not a correct proposition of law. They need not be discussed in detail. The common thread in all the decisions under sections 40(c)(iii), 40(a)(v) and 40A(5) is that the payment of a sum of money cannot be a perquisite as it cannot be converted into money or money's worth. These three sections treat the sum paid by the employer as a perquisite for the purposes of disallowance thereunder only when the payment is convertible into money. Section 40(c)(iii) reads as under : --- " any expenditure incurred after the 29th day of February, 1964, which results directly or indirectly in the provision of any benefit or amenity or perquisite, whether convertible into money or not, to an employee (including any sum paid by the company in respect of any obligation which but for such payment would have been payable by such emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initions of "perquisite", one under section 17(2) and another under section 40A(5). Their operative fields are different. Significantly, the words " whether convertible into money or not " occurring in section 40A(5) do not appear in the definition of "perquisite" in section 17(2). That apart, Explanation 2 to section 40A(5) begins with the words " in this section ", meaning thereby that it is only for the purpose of that section, it has that meaning, which cannot be extended to the word " perquisite " occurring in section 17(2). Conversely, the inclusive definition of perquisite in section 17(2) is only for the purpose of sections 15 and 16 and not of section 40A. It means that the Legislature intended that the broader and inclusive definition of " perquisite " in section 17(2) shall not govern the meaning of perquisite in section 40A. Also Explanation 2(b) to section 40A(5) begins with the words " perquisite means ", whereas in section 17(2) the definition begins with the words ; "perquisite includes ". So, one is restrictive and the other one is comprehensive. [See Kesava Reddi v. R.D.O., Anantapur (1966) 1 ALJ 255 and Taj Mahal Hotel v. CIT [1968] 70 ITR 366 (AP).] For all th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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