COMMISSIONER OF INCOME TAX Vs. LALA SHRI DHAR

JUDGEMENT

(1.) The question raised in this reference made by the Income-tax Appellate Tribunal (Delhi Bench A) under Section 66(1) of the Indian Income-tax Act, 1922, is not only interesting but important for its decision may have an effect on numerous policies of personal accident insurance taken by the employers for protecting themselves against the demands for payment of compensation to their employees. Several decisions were cited before us by counsel for the parties, but none of them had a direct bearing on the question. In a way therefore, it may be said, that the question is res Integra and its decision turns on the meaning of the word "perquisite" as used in Section 7 of the Indian Income-tax Act, 1922 which will hereafter be referred to as the Act.

(2.) The question has arisen in connection with the assessment of the respondent who will hereafter be referred to as the assessee in respect of the assessment years 1959-60, 1960-61, 1961-62 and relates to his income under the head salary. The relevant previous years ended on 31-3-1959, 31-3-1960 and 31-3-1961 respectively.

(3.) The respondent Lala Shri Dhar was a director of Madan Mohan Lal Sri Ram and Company (P) Ltd. which will hereafter be described as the "employer company." He was stationed at the company's works at Calcutta. On 29-1-1957 the Board of Directors of the employer company decided by a resolution, to purchase personal accident insurance under a comprehensive policy in respect of the assessee and one other person, Lala Shri Ram. We are concerned in this case with the assessee only. The policy was effected on 3-2-1958 with the London & Lancashire Insurance Company Ltd. the premium payable being Rs. 1597.19. The duration of the policy was one year.