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2018 (10) TMI 725

TDS u/s 192 - Addition u/s 17(2(v) - income from salary - perquisite - expenditure incurred for medical treatment of an employee incurred outside India - AO invoked the provisions of section 192 and held that the assessee is liable to deduct TDS @ 30% - Held that:- CIT(A) has deleted the additions on the ground that, Since RBI allows remission of medical expenses of the amount involved in the appellant's case, the AO's case that no permission of RBI existed in the instant case is not correct. As regards employees having gross total income equal to or exceeding 2,00,000/- the exclusion from the exemption as provided in Proviso(vi) to Section.17(2) applies only to travel expenses and not to medical expenses. Both the reasons cited by the AO for holding the appellant liable for TDS are not relevant. The AO, therefore, is not correct to hold that the appellant is liable to deduct TDS u/s.192 from medical expenses. - In case the payee Mr. Dugar is not treated as a bonafide employee then the expense paid by the-appellant cannot be termed as perquisite. In that case the liability u/s. 192 cannot be brought upon the appellant. - Order of CIT(A) confirmed - Decided against the Revenue. .....

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d prayed to remand the matter to the file AO for his examination. 5. On the other hand , the ld.AR submits that the Circular No. 603 dt. 6-6-1991, clearly states that when the medical treatment is availed in a hospital outside India and the expenditure incurred thereon for medical treatment including travel and stay abroad of one attendant to the extent permitted by the RBI, subject to the condition that the amount qualifying for such tax exemption would not include expenditure incurred on travel in the case of employees whose gross total income, as computed without considering the amount paid or reimbursed for expenditure in connection with medical treatment abroad, exceeds ₹ 1,00,000/- and referred to para (v) of above said circular. 6. Further an amendment came into force from 1-4-1993 by the Finance Act 1992 to the sub-section (5) of section 17 (2) of the Act and submitted that under the liberalized remittance scheme of RBI, US$ 250000 is allowed per financial year and referred to footnotes of section 17(2) of the Act. 7. Further, the ld. AR referred to frequently asked question (FAQ) updated on 30-09-2013 at Q No. 6 - How much foreign exchange can be drawn for medical tr .....

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lause in master circulars issued by the RBI clarifies any amount exceeding above an estimate from the doctor in India or abroad is required to be submitted to the authorized dealers. Admittedly as is noted from page-10 of the paper book as it was a correspondence between the hospital abroad and person concerning the employee of assessee, who underwent medical treatment abroad shows the estimated cost of medical treatment of ₹ 450000 in Singapore dollars. As pointed out by the ld. AR, it is clear from pages- 4 to 6 of the paper book the assesse made an application dt. 12-12-2012 to Axsis Bank Ltd CBB Branch for issuance of foreign demand draft/foreign outward remittance. 10. Further, the ld.AR pointed out to frequently asked question - Q. No. 6, which is placed on record at page-2 of the paper book, which is reproduced herein below:- Q. 6 How much foreign exchange can be drawn for medical treatment abroad? Ans. AD Category I banks and AD Category II, may relese foreign exchange upto USD 100,000 or its equivalent to resident Indians for medical treatment abroad on self-declaration basis, without insisting of any estimate from a hospital/doctor in India/abroad. A person visiting .....

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00 in a year, in the aggregate; and (v) Where the medical treatment is availed of in a hospital outside India and the expenditure is incurred for treatment (including on travel and stay abroad in connection with such treatment ) as also on travel and stay abroad of one attendant, to the extent permitted by the Reserve Bank of India, subject to the condition that the amount qualifying for such tax exemption would not include expenditure incurred on travel in the case or employees whose gross total income, as computed under the Income-tax Act without considering the amount paid or reimbursed for expenditure in connection with medical treatment abroad, exceeds ₹ 1.00,000. 2. The contents of this circular will be applicable in relation to the assessment year 1991-92 and the subsequent years." 13. A close reading of the above circular explains that the value of perquisite arising by way of payment or reimbursement by an employer of expenditure on medical treatment on himself or on his spouse, children or parents, including the provision of free medical treatment or treatment at a concessional rate, will not be included in the taxable salary of the employee. Therefore, it is c .....

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sion of medical expenses of the amount involved in the appellant's case, the AO's case that no permission of RBI existed in the instant case is not correct. As regards employees having gross total income equal to or exceeding 2,00,000/- the exclusion from the exemption as provided in Proviso(vi) to Section.17(2) applies only to travel expenses and not to medical expenses. Both the reasons cited by the AO for holding the appellant liable for TDS are not relevant. The AO, therefore, is not correct to hold that the appellant is liable to deduct TDS u/s.192 from medical expenses. This ground, therefore, has to be allowed. 6.4.2. In case the payee Mr. Dugar is not treated as a bonafide employee then the expense paid by the-appellant cannot be termed as perquisite. In that case the liability u/s. 192 cannot be brought upon the appellant. In this case also thus there cannot be liability of the appellant to deduct TDS. The ground, therefore is allowed. 15. In view of our discussion made hereinabove and the finding of the CIT-A contained in paragraph 14 of this order, we find no violation of Rule 46A of the IT Rules 1962 and as such no infirmity in the impugned order of the CIT-A an .....

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