TMI Blog2007 (5) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Tribunal is correct in law in holding that the reimbursement of medical expenses to an employee being the director of the company, is not 'perquisite' within the meaning of section 17(2) (iii) (a) of the Income- tax Act, 1961 ?" The present reference relates to the assessment year 1990-91. 2. Briefly stated the facts giving rise to the present reference are as follows : The assessee an individual by status, is a director in a public limited company drawing salary of Rs. 24,000 per annum in addition to rent free accommodation and certain other perks. 3 Due to heart ailment, the assessee was advised bypass surgery outside India. An expenditure of Rs. 4,75,009 was incurred on his surgery at Texas in U. S. A., which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as perquisite for the purposes of salary. Clause (iv) of sub-section (2) of section 17 of the Act which is to the following effect is included in the word "perquisite". "Any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee." 8 From the perusal of the aforesaid clause, it appears that in order to qualify the amount to be a perquisite, it is necessary that the employer should have directly paid the amount to another person to discharge the obligation of the assessee. If the amount is paid by the employer towards reimbursement of the expenditure incurred by the assessee it would not fall under the aforesaid clause. Similar provision existed under section 40A(5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) of section 17 of the Act. 10 As in the present case, the payment has been made by the employer to the hospital concerned directly but the reimbursement has been made to the assessee would not come under the word "perquisite". Providing of reimbursement towards medical expenditure also cannot be considered as an amenity provided by a company to its director. It is only in an exceptional situation that the director had to undergo the by-pass surgery. Moreover, it cannot be treated as a benefit. 11 Thus, it would also not qualify under sub-clause (a) of sub-section (2) of section 17 of the Act as it cannot be considered as a amenity or benefit granted by the employer. 12 In this view of the matter, we answer the q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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