H.L. Karwa, Judicial Member. - (1.)THIS is an appeal by the revenue and is directed against the order of Commissioner (Appeals)-XXV, New Delhi dated 10-2-2000 relating to assessment year 1996-97. The only effective ground raised by the revenue in this appeal reads as under : "On the facts and circumstances of the case and in law, the learned Commissioner (Appeals) erred in deleting the addition made by the assessing officer as perquisite; on account of expenses on Pension Plan (Rs. 99,382) paid by the employer on behalf of the employee."
(2.)Briefly stated, the facts of the case are that the assessee is a foreign national working as Managing Director of GE Capital Services India. The assessee filed the return of his income on 28-6- 1996 declaring total income of Rs. 1,70,14,850 comprising of income from salary of Rs. 1,71,39,570, income from capital gains of Rs. 1,24,720 and income from other sources of Rs. 15,241. During the assessment proceedings, the assessing officer required the assessee to show cause why the contribution of employer to pension fund, insurance fund and other schemes should not be taxed as perquisites under section 17(2) of the Act. The assessee vide letter dated 22-12-1998 filed a detailed reply. In this regard, the assessee submitted that GE Capital, as a policy contributes to GE Expatriate Pension Plan which is in the nature of a social security plan. An employee, who has continuously served for more than 5 years, becomes eligible to the benefit of pension fund contribution made by GE. It was also submitted that the pension is receivable only after the retirement subject to vesting in the plan. The contribution to these funds has been claimed as exempt from taxation. The assessing officer did not find any merit in the above submissions of the assessee and took the view that the contribution made by the employer towards pension plan is a perquisite under section 17(2)(v) of the Act. The assessing officer has relied on the decision of Patna High Court in the case of CIT v. J.G. Keshwani (1993) 202 ITR 391, where premium paid to buy the deferred annuity policy was held to be the part of the salary income. The assessing officer has further held that the contribution of the employer to the pension fund and insurance plan are payments made to un-recognized funds "since based outside India" and is essentially a payment to effect a contract for an annuity for the employee. He further held that the payment to insurance plan is essentially to effect an assurance on the life of the assessee and the same is covered under section 17(2)(v) of the Act. According to the assessing officer, as the group insurance plan is not approved by the Central Government under section 36(1)(ib), no exemption referred to in clause (iii) of proviso to section 17(2) will be available and the payments will be covered as perquisite under section 17(2)(v) of the Act.
Aggrieved by the order of assessing officer, the assessee carried the matter in appeal before the Commissioner (Appeals). Before the Commissioner (Appeals), it was argued on behalf of the assessee that section 15 of the Act provides that salary is taxable on due or receipt basis, whichever is earlier and the same is the charging section for determining taxability under the head "Salary". It was also submitted by the assessee that in order to attract liability under section 15 of the Act, the employee should have some vested interest in the amounts paid by the employer. Mere contingency of getting some benefit from the payments made by the employer would not justify if being taxed under this provision. Accordingly, it was submitted by the assessee before the Commissioner (Appeals) that the benefit in money for which the pension is being made liable to tax, should be vested in the person, who is being charged under this section. It was also submitted that a reading of section 17(2) of the Act in conjunction with section 15 of the Act makes it clear that a benefit may be termed a "perquisite" only if, a right is conferred on the employee to receive the same from the employer. In short, the contingent payments (to which the employee has no right till the occurrence of the contingency) cannot be termed as "perquisite" under the Act. Reliance was placed on the judgment of Honble Supreme Court in the case of CIT v. L.W. Russel (1964) 53 ITR 91.

(3.)IT was also submitted by the assessee before the Commissioner (Appeals) that the provisions of sections 15 and 17 of the Act when read together do not in any way detract from the fact that deferred/contingent benefits (to the extent not due) are not liable to be charged under the head "Income from salary". IT was specifically argued by the assessee before the Commissioner (Appeals) that the provisions of section 17(2)(v) of the Act seek to tax any sum paid in order to effect a contract for "annuity" on the assessee. The assessee also submitted before the Commissioner (Appeals) that a reading of section 17(2) alongwith section 15 would make it clear that in order that a benefit or payment may be termed as perquisite, a right is conferred on an employee in respect of that perquisite to receive it from his employer. One cannot be said to allow a perquisite to an employee if the employee has no right to the same. IT was specifically pleaded before the Commissioner (Appeals) by the assessee that it cannot apply to contingent payment to which the assessee has no right till the contingency occurs. Thus, the employee must have a vested right therein.