COMMISSIONER OF INCOME TAX Vs. B L GARG

JUDGEMENT

(1.) These two references were heard together and are being disposed of by a common judgment as the question of law and facts are overlapping with each other. The Income Tax Appellate Tribunal has made these references under Section 256 (1) of the Income Tax Act 1961 (hereinafter referred to as the Act). The following question of law has been referred in Income Tax Reference No. 25 of 1997 for the assessment year 1988 -89:Whether scholarship given to the students of employee's of the Co. be included in the assessee 's income?

(2.) Whereas in the Income Tax Reference No. 104 of 1995, Income Tax Appellate Tribunal, Meerut has referred the following question for the assessment year 1988-89:Whether on the facts and in the circumstances of the case the ITAT was legally correct in confirming the order of the lower Appellate Authority by allowing scholarship to the assessee's son as exempt?

(3.) The facts of both the above references are identical and the Tribunal while deciding the appeal in the case of Shri Y.K. Seth, giving rise to the reference No. 104 of 1995, has followed its earlier order passed in the case of Shri B.L. Garg giving rise to the reference No. 25 of 1997. Both the assessees were employees of Modi Rubber Limited, Modipuram in the relevant assessment years. While computing the taxable income, the assessing officer found that the assessee has not disclosed a sum of Rs. 18,000/- in the case of Shri B.L. Garg and a sum of Rs. 12,000/- in the case of Shri Y.K. Seth. These amounts were paid by the Company to the assessee's son as scholarship. The Assessing Officer after rejecting the assessee's plea that the said amount is exempt under Section 10 (16) of the Act added them in the income of the assessee on the ground that the said sum is liable to be added in the income of the assessee being perquisite.