9911796707
TMI Blog2002 (2) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... s disclosed at Rs. 1,33,200. The perks in the shape of medical reimbursement were claimed to be exempt with a note. 4. The Assessing Officer during the course of assessment proceedings, asked the assessee to clarify how perks allowed to the assessee in respect of medical treatment were claimed as exempt. In his reply, dated 12-4-1994, the assessee submitted as under: "Please refer to your above mentioned questionnaires dated 25-6-1993 and in this regard I have to state as under: That as per section 17(2)(vi)(1) of Income-tax Act, the travelling expenses of employee and his one attendant is not allowable expenditure and it will be treated as perquisite in the case of employee whose total income exceeds Rs. one lakh but the I.T.A.T., Jaipur Bench held that the expenses incurred for the treatment of M.D. cannot be treated as perquisite in the hands of the Managing Director. I am also enclosing R.B.I.'s permit for issuing foreign exchange and also the copy of the application submitted to the R.B.I. for the expenses incurred." 5. During the course of assessment, the assessee also produced certificate from M/s. Upper India Steel Mfg. & Engg. Co. Ltd. relating to medical expenses i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken as exempt as medical expenses and not as taxable perquisites. The Assessing Officer in the penalty order emphasised that even after the employer company had treated these expenses as taxable for the purposes of tax deducted at source, the assessee failed to return them as income. The Assessing Officer also referred to amendment made in sub-section (2) of section 17 under which "expenditure" incurred by employer on medical treatment of employee whose gross income exceeds Rs. one lakh was liable to be taxed as perquisite. Such expenditure are not covered by clause (vi) of section 17(2) of Income-tax Act. The Assessing Officer held that the assessee had deliberately not shown the above mentioned perquisite in the income and was liable to pay penalty under section 271(1)(c) of the Income-tax Act. The Assessing Officer imposed penalty of Rs. 60,215 which represented 100% of tax sought to be evaded. 8. The assessee impugned above levy in appeal before the CIT(A) who after examining facts and circumstances of the case, held that the assessee had acted bonafidely and, therefore, no penalty in this case was exigible even under Explanation Ito section 271(1)(c) of the Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act. 11. I have heard both the parties. There is no dispute that the expenditure incurred by the employer on medical treatment of employee outside India were exempt in the assessment year 1992-93. The following items of expenditure incurred by the employer were exempt as per clause (vi) of section 17(2):- (1) Medical treatment of the employee, or any member of the family of such employee, outside India; (2) Travel and stay abroad of the employee or any member of the family of such employee for medical treatment; (3) Travel and stay abroad of one attendant who accompanies the patient in connection with such treatment. 12. With effect from 1-4-1992, i.e., in the assessment year 1992-93 the above exemptions were subjected to the following conditions "Subject to the condition that expenditure on travel referred to in sub clauses (2) and (3) of this clause shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed one lakh rupees and subject to such further conditions and limits in relation to such expenditure as the Board may, having regard to the guidelines, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na fide claim is made on a reasonable ground. The assessee furnished all particular material for his assessment. Once claim was disallowed, the assessee gracefully accepted the order by not filing any appeal. In the above circumstances, no penalty, in my view, is exigible. No material has been brought on record to show that any attempt of concealment or furnishing of inaccurate particulars was made by the assessee. The ratio of two decisions, one of Hon'ble Supreme Court and the other of Hon'ble Allahabad High Court quoted by the CIT(A) in the impugned order are fully applicable on the facts of the case. 16. The Revenue authorities for holding that it is a fit case for levy of penalty under -section 271(1)(c) mainly relied upon the fact that the company had deducted tax at source treating the disputed items as 'perquisite'. In my considered opinion, the fact of deduction of tax at source by employer is not conclusive to establish the concealment of income or furnishing of inaccurate particulars of such income as envisaged under section 271(1)(c) of the Income-tax Act. It is a matter of common knowledge that people responsible for tax deduction at source are controlled by audit an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In this connection, assessee's letter dated 11-4-1994 is relevant. In the said letter, the assessee has referred to R.B.I.'s permission for incurring expenses in question. The assessee has also taken into account the decision of ITAT, Jaipur Bench whose ratio has been noted earlier. In the above backdrop, the assessee bonafidely contested the claim. There is no doubt that the Assessing Officer added Rs. 1,07,530 as taxable perquisites in the quantum assessments. However, the addition can be reconsidered afresh for penalty proceedings which are admittedly distinct and separate from the assessment proceedings'. The medical treatment of employee or any member of family of such employee outside India is exempt and in this case the medical treatment of the assessee required that a doctor should accompany the assessee abroad. It can be reasonably argued that 'air fare and fees paid to the doctor' is covered by the provision exempting 'expenditure incurred on medical treatment outside India'. The services of the doctor were considered necessary for medical treatment of employee outside India. It is directly covered under sub-clause of clause (vi) of section 17(2) of the Income-tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
