Rajendra, Accountant Member - (1.) THE assessee-company deals in photographic films and materials. THE relevant account year ended 31-10-1979. Ground No. 1 :
(2.) The ITO disallowed under Section 40A(5)(a) of the Income-tax Act, 1961 ('the Act') Rs. 81,802 under Sub-clause (i) and Rs. 64,391 under Sub-clause (ii). He treated the medical expenses reimbursed by the assessee-company to its employees as part of the employees' salaries as per directions of the IAC. The Commissioner (Appeals), however, observed that the ITO had treated the reimbursement of medical expenses to the employees by the assessee-company as perquisites and that the said action of the ITO was wrong because any cash payment cannot be treated as perquisite. He relied on the Tribunal Bombay's order in the case of Glaxo Laboratories (India) Ltd. v. Second ITO [1986] 18 ITD 226 (SB), [details not given in Commissioner (Appeals)'s order] for coming to the said finding. He accordingly deleted Rs. 10,806.
(3.) WE have already noted above that the ITO has treated reimbursement of medical expenses as part of salary which was in conformity with paragraph 19 of the Tribunal Bombay, Special Bench decision in Blackie & Sons (India) Ltd. v. ITO [1983] 3 SOT 72. WE accordingly vacate the Commissioner (Appeals)'s order on this point and restore that of the ITO. Ground No. 2 :;