Commissioner Of Income-Tax vs K.G. Khosla Compressors Ltd.
1995 Latest Caselaw 664 Del

JUDGMENT

Dr. M.K. Sharma, J.

1. In this petition, under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Revenue has sought for a reference to this court in respect of the following question relevant to the assessment year 1978-79 :

"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that expenses on medical reimbursement ar Rs. 5,086 and payment of insurance premium at Rs. 1,350 could not be considered as perquisite for computing disallowances under section 40(c) of the Income-tax Act, 1961 ?"

2. The aforesaid question was sought to be referred by the Revenue in a reference application under section 256(1) of the Act. The Tribunal, while disposing of the aforesaid application, held that question involved is not a referable question of law in view of the fact that the Tribunal followed the judgments of this court in the case of CIT v. Bharat Ram Charat Ram Pvt. Ltd. [1986] 157 ITR 199 and Installment Supply Pvt. Ltd. v. CIT [1984] 149 ITR 457.

3. Our attention has been drawn to a subsequent decision of this court in the case of CIT v. Shriram Refrigeration Industries Ltd., disposed of on May 18, 1992 - [1992] 197 ITR 431, wherein this court took note of the earlier decisions of this court on the question including the decision in Installment Supply Pvt. Ltd.'s case .

4. On a consideration of the ratio of the aforesaid decisions and also the provisions of section 40A(5) of the Act and also the provisions of section 40(c) of the Act this court held that the payment of cash allowance to an employee by way of reimbursement of medical expenses or house rent is not a perquisite. The aforesaid view taken by this court in the case of CIT v. Shriram Refrigeration Industries Ltd. [1992] 197 ITR 431 is also the view taken in catena of authorities noted by this court in Shriram Refrigeration Industries Ltd.'s Case [1992] 197 ITR 431. On a reading of the decision in the aforesaid cases, we find that so far as this court is concerned it has all along been the view of this court that payment of cash allowance to an employee by way of medical expenses or house rent allowance is not a perquisite. Approving the view of the Calcutta High Court in CIT v. Kanan Devan Hills Produce Co. Ltd. [1979] 119 ITR 431, in the case of Shriram Refrigeration Industries Ltd. [1992] 197 ITR 431, this court has further held that the payment in cash made by the employer to an employee by way of reimbursement does not fall under sub-clauses (i) to (v) of clause (b) of Explanation 2, and that being so the payment in question cannot be regard as a perquisite at all. It is not disputed before us that the question raised in the present petition is concluded by the aforesaid decisions of this court. Accordingly, following the ratio of the aforesaid decisions of this court, we hold that the question sought to be referred in this petition is really academic and no referable question arises there from. This petition is accordingly dismissed. No costs.