COMMISSIONER OF INCOME TAX Vs. M N NADKARNI

JUDGEMENT

(1.) TWO questions have been referred to us in this reference under section 256(1) of the Income -tax Act, 1961 (referred to hereinafter as 'the Income -tax Act'). The said questions run as follows : '(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the scholarship amount of Rs. 2,400 given by the employer to the two children of the assessee -employee is not a benefit in terms of section 17(2)(iii) of the Income -tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the scholarship amount of Rs. 2,400 given by the employer to the two children of the assessee -employee is exempt under section 10(16) of the Income -tax Act, 1961 ?'

(2.) QUESTION No. 1 was referred at the instance of the Commissioner and question No. 2 was referred at the instance of the assessee.

(3.) WE propose first to discuss question No. 1 referred to us. In this connection, it will be useful to take note of the provisions of section 17 of the Income -tax Act. Sub -section(l) of section 17, inter alia, provides that 'salary' includes perquisite given to an employee. Sub -section (2) of section 17 gives an inclusive or extensive definition of the term 'perquisite'. Relevant portion of clause (iii) of sub -section (2) runs as follows : 'the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases -...... (c) by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub -clause do not apply and whose income under the head 'Salaries', exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds eighteen thousand rupees.'