(a) Income-tax---

----Reference---Academic questions cannot be referred---Indian Income Tax Act, 1961, S.256.

(b) Income-tax---

----Reference---Business expenditure---Disallowance---Perquisites to employees--- Reimbursement of medical expenses and payment of insurance premia---Decisions of High Court that such payment would not amount to perquisites---Question whether such payments could be regarded as perquisites was academic and could not be referred---Indian Income Tax Act, 1961, Ss.40(c) & 256.

Held that the Delhi High Court in CIT v. Bharat Ram Charat Ram (Pvt.) Ltd. (1986) 157 ITR 199 and Instalment Supply (Pvt.) Ltd. v. CIT (1984) 149 ITR 457, had held that payments in cash made by the employer to an employee by way of reimbursement cannot be regarded as a perquisite. The question whether expenses on medical reimbursement and payment of insurance premia could be considered as perquisites for computing disallowance was academic and could not be referred.

CIT v. Bharat Ram Charat Ram (P.) Ltd. (1986) 157 ITR 199 (Delhi) and Instalment Supply (Pvt.) Ltd. v. CIT (1984) 149 ITR 457 (Delhi) applied.

CIT v. Knan Devan Hills Produce Co. Ltd. (1979) 119 ITR 431 (Cal.) and CIT v. Shriram Refrigeration Industries Ltd. (1992) 197 ITR 431 (Delhi) ref.

Rajendra with D.C. Taneja for Petitioner.

S.K. Aggarwal for Respondent.

JUDGMENT

DR. M. K. SHARMA, J. ---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 at 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?"

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 the 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 (Pvt.) Ltd (1986) 157 ITR 199 and Instalment Supply (Pvt.) Ltd. v. CIT (1984) 149 ITR 457.

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 Instalment Supply (Pvt.) Ltd. s case (1984) 149 ITR 457 (Delhi).

On a consideration of the ratio of the aforesaid decisions and also the provisions of section 40-A(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 a 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 Divan 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 regarded as a perquisite at all. It is not disputed before us that the question raised in the present petition is concluded by the aforesaid decision 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 therefrom. This petition is accordingly dismissed. No costs.

M.B.A./1287/FCPetition dismissed.