Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, two questions have been referred, one at the instance of the assesses and the other at the instance of the Revenue. It is better to deal with the question referred at the instance of the Revenue. The question is as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the reimbursement by the assessee of the medical expenses incurred by its employees did not result directly or indirectly in the provision of any benefit or amenity or perquisite to the employees within the meaning of Section 40(c)(iii) of the Income-tax Act 1961?"
(2.) The ITO in this assessment had included medical allowance paid to the employees in the computation for the purpose of disallowance under Section 40(c)(in) of the I.T. Act, 1961, In the appeal before the AAC, following his predecessor's order, he confirmed the action of the ITO. When the matter went up in appeal before the Tribunal, it was submitted on behalf of the assessee that the medical bills of the employees were reimbursed and were paid in cash. These could not be treated as benefit or amenity or perquisite falling within the meaning of Section 40(c)(iii) of the I.T. Act, 1961. The Tribunal accepted this contention following the decision of the Tribunal for the previous year. On the construction of the section we are of the opinion that the Tribunal was right. This view which we are taking is in consonance with the view expressed by this court in Income-tax Reference No. 254 of 1979 (Indian Leaf Tobacco Development Co. Ltd. v. CIT) (judgment delivered on 10th August, 1981) ([1982] 137 ITR 827).
(3.) For the reasons aforesaid and on the construction of the section and in the facts and circumstances of this case, we are, therefore, of the opinion that the Tribunal came to the correct conclusion on this aspect of the matter and thereafter has referred this question at the instance of the Revenue to this court and we, therefore, answer the question in the affirmative and in favour of the assessee. In this connection, reference may also be made, though not directly on this point, to the decision of this court in the case of CIT v. Kanan Devan Hills Produce Co. Ltd. [1979] 119 ITR 431.;