SUGRA SULAIMAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the following question of law has been referred for the opinion of this court :

(2.) THE assessee is an individual and an employee of M/s. Mecotronics P. Ltd., of which her husband, during the relevant year, was the managing director. For the assessment year 1972-73, the assessment was completed on a total income of Rs. 27,713 and in the course of the examination of the accounts of Messrs. Mecotronics P. Ltd., it was found that the company had met the expenditure of Rs. 16,620 incurred by the assessee in respect of a foreign tour in which she had accompanied her husband. THEreupon, the assessment was reopened under section 147(a) of the Act and the Income-tax Officer subjected to tax the amount of Rs. 16,620 as perquisite. On appeal by the assessee, the Appellate Assistant Commissioner took the view that there was no obligation on the part of the assessee to spend money on the foreign tour and in its absence, there was no scope for the application of section 17(2)(iv) of the Act and deleted the inclusion of Rs. 16,620, representing the cost of air fare, etc., of the assessee as perquisite. On further appeal by the Revenue to the Tribunal, it took the view that as the expenses incurred by the company had not been claimed by the assessee, she was under an obligation to pay the air fare and that, in turn, having been met by the employer, section 17(2)(v) of the Act stood attracted and the addition of Rs. 16,620 as perquisite was in order. That is how the question referred at the outset has arisen.