TMI Blog2005 (11) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... o as (MEI), as Vice President (services) with M/s National Panasonic India Ltd., of which company he was deputed by 'MEI'. While completing this assessment under s. 143(3) of the Act, the AO made an addition of Rs. 4,69,608 under s. 17(2)(v) of the Act. The aforesaid amount represents the contributions made by MEI, which is a Japanese company, towards the following: (i) Health insurance (ii) Welfare pension insurance (iii) Employment insurance, and (iv) Employment pension insurance 3. The above four types of contributions are collectively known as "Social Security Plan" and they are payable by the employer with regard to all the employees as per the laws ofJapan. The social security schemes are administered by the Government of Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right to the same. He also referred to the judgment of the Hon'ble Delhi High Court in CIT vs. Mehar Singh Sampuran Singh Chawla (1973) 90 ITR 219 (Del) to hold that the contributions made by the employer towards a fund established for the welfare of the employees would not be treated as perquisite in the hands of the employees concerned, as they do not acquire any vested right in the sum contributed by the employer. The CIT(A) distinguished the judgment of the Hon'ble Patna High Court in CIT vs. J.G. Keshwani (1993) 115 CTR (Pat) 343 : (1993) 202 ITR 391 (Pat) on which considerable reliance was placed by the AO. In that case, the assessee was employed as a director of the company and in terms of the compensation package he was entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insurance and welfare insurance in respect of all its employees to cover loss of employment, sickness, death, accident, etc. of the employee and that the benefit from the policies depend upon the contingency which mayor may not take place, the intention of the employer in taking out such policies being to safeguard his own interest against the happening of such contingencies in future. The CIT(A) further noted that the assessee had no vested right to receive any payment under the insurance plans and that the contributions made by the employer are neither to effect any insurance on the life of the employee nor to secure the payment of any annuity to the employee. He also noted that the ratio of the Hon'ble Delhi High Court in CIT vs. Lala S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case also, there is a finding recorded by the CIT(A) that the contributions made by the 'MEI' ofJapanare part of the Social Security Plan formulated by the Government of Japan in which the participation of employers and the employees is mandatory. The Tribunal further found in the above orders that the benefits under the pension schemes vest with the employees only when they attain the age of superannuation. In fact, the case of Yoshio Kubo was a case of a Japanese national, who was an employee of M/s Sony Corporation ofJapanand was deputed to render services to M/s Sony India Ltd. It was noticed from the details of the welfare pension scheme that: (a) The contribution was covered by the welfare pension law enacted by the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Yoshio Kubo that was followed by the Tribunal in the case of Thomas William Farrel and Lawrence Joseph Krammer. 12. In the case of CIT vs. Lala Shri Dhar, the Delhi High Court was concerned with contributions made by the employers under policies of personal accident taken out by them for protecting themselves against the liability for payment of compensation to their employees. It was held by the Hon'ble High Court that the decision to take the policy was taken by the company, which paid the premium, that the assessee himself did not want to take out the insurance, that if the company had stopped paying the premium, the assessee would not have continued the same from year-to-year and, therefore, the contribution paid by the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned CIT(A), not challenged before us, that the assessee does not acquire any vested right over the payment at the time of contribution. Therefore, the aforesaid decisions, relied on by the learned counsel for the assessee including the orders of the Delhi Benches of the Tribunal would apply. With regard to the insurance plans, the CIT(A) has found that the contributions are made to benefit the employer and to protect him from loss of employment, sickness, death, accident, etc. of the employee and that the policies themselves are contingent in nature, the benefit under which would depend on whether the contingency takes place or not. Therefore, the ratio of the above decision, is equally applicable to these contributions. 14. At the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
