Commissioner of Income Tax vs Alkali and Chemical Corpn. of India Ltd.

Ajit Kumar Sengupta, J.—In this reference u/s 256(1) of the Income Tax Act, 1961, for the assessment year 1965-66, the following question of law has been referred to this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the payments made by the assessee to its employees by way of reimbursement of medical bills incurred by the employees did not represent expenditure resulting directly or indirectly in the provision of any benefit or amenity or perquisite to the said employees within the meaning of Section 40(c)(iii) of the Income Tax Act, 1961?"

This question came up for consideration before this court in Commissioner of Income Tax Vs. Kanan Devan Hills Produce Company Ltd., , Indian Leaf Tobacco Development Co. Ltd. Vs. Commissioner of Income Tax, , Commissioner of Income Tax Vs. National and Grindlays Bank Limited, . This court held that the cash payment on account of reimbursement of medical expenses of the employees could not be included in the value of the benefit, amenity or perquisite for the purpose of disallowance in excess of the limits laid down in Section 40(c)(iii) or Section 40(a)(v) of the Income Tax Act, 1961.

We may also note that the Andhra Pradesh High Court in the case of Commissioner of Income Tax Vs. Warner Hindustan Ltd., , the Madras High Court in the case of Commissioner of Income Tax, Tamil Nadu-V Vs. Manjushree Plantations Ltd., and the Karnataka High Court in the case of Commissioner of Income Tax Vs. Mysore Commercial Union Ltd., and the Delhi High Court in the case of Installment Supply P. Ltd. Vs. Commissioner of Income Tax, New Delhi, , have taken similar views. It may be mentioned that the Andhra Pradesh, Madras and Delhi High Courts have followed the decisions of this court and in particular the decision in the case of Kanan Devan Hills Produce Company Ltd. [1979] 11 ITR 431.

Mr. Mihir Lal Bhattacharjee, learned advocate for the Revenue, has however, drawn our attention to the Full Bench decision of the Kerala High Court in the case of Commissioner of Income Tax Vs. Commonwealth Trust Ltd., , which has dissented from the view taken by this court in Commissioner of Income Tax Vs. Kanan Devan Hills Produce Company Ltd., .

In view of the decisions of this court as referred to above, the question in this reference has to be answered in the affirmative and in favour of the assessee.

These will be no order as to costs.