Commissioner of Income Tax vs M.R. Kini

K.S. Paripoornan, J.—At the instance of the Revenue, the following question of law has been referred for the decision of this court :

"Whether, on the facts and in the circumstances of the case, the monthly allowance towards expenditure on refreshments cannot be treated as income and is not taxable ?"

The respondent is an assessee to Income Tax. His employer provided a cash allowance of Rs. 200 per mensem to him for meeting the refreshment expenses during office hours. This was brought to tax by the assessing authority. In appeal, the Appellate Assistant Commissioner held that refreshment provided during office hours cannot be taken as a perquisite and so the cash allowance cannot be taxed. In appeal by the Revenue, the Appellate Tribunal held that since this is a provision for meeting the expenditure on refreshments provided to employees during lunch hour, it cannot be treated as the income of the assesses and so is not taxable. It is thereafter at the instance of the Revenue that the above question of law has been referred for the decision of this court.

We heard counsel for the Revenue, Mr. P. K. R. Menon, as also counsel for the respondent-assessee, Mr. Pathrose Mathai. Section 2(24) (iiia) and (iiib) have been introduced in the Act with retrospective effect from April 1, 1962. They are as follows :

"2. Definitions.--In this Act, unless the context otherwise requires,--....

(24) ''income'' includes--...

(iiia) any special allowance or benefit, other than a perquisite included under Sub-clause (iii) specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit ;

(iiib) any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living."

The above sub-sections extend the scope of the term "income" so as to include the special allowances and benefits mentioned in these special clauses. Considered in the light of the above new provisions, we have to hold that the allowance given to the assessee for meeting the refreshment expenses during office hours is taxable as income. We answer the question referred to this court in the negative and hold that the allowance towards expenditure on refreshments is income and is taxable. The question is decided in favour of the Revenue and against the assessee.

A copy of this judgment under the seal of this court and the signature of the Registrar will be forwarded to the Income Tax Appellate Tribunal Cochin Bench.