Commissioner of Income Tax vs K.G. Khosla Compressors Ltd.

Dr. M.K. Sharma, J.—In this petition, u/s 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 u/s 40(c) of the Income Tax Act, 1961 ?"

The aforesaid question was sought to be referred by the Revenue in a reference application u/s 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 Commissioner of Income Tax, Delhi-I Vs. Bharat Ram Charat Ram P. Ltd., and Installment Supply P. Ltd. Vs. Commissioner of Income Tax, New Delhi, .

Our attention has been drawn to a subsequent decision of this court in the case of Commissioner of Income Tax Vs. Shriram Refrigeration Industries Ltd., , wherein this court took note of the earlier decisions of this court on the question including the decision in Installment Supply P. Ltd. Vs. Commissioner of Income Tax, New Delhi, .

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 Commissioner of Income Tax Vs. Shriram Refrigeration Industries Ltd., is also the view taken in catena of authorities noted by this court in Commissioner of Income Tax Vs. Shriram Refrigeration Industries Ltd., . 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 Commissioner of Income Tax Vs. Kanan Devan Hills Produce Company Ltd., , in the case of Commissioner of Income Tax Vs. Shriram Refrigeration Industries Ltd., , 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.