- (1.) THIS appeal is filed by the Revenue, seeking to challenge, the order of the Tribunal, dt. 22nd July, 2004, where by the order of the CIT(A), dt. 26th Aug., 1996, was affirmed. The learned CIT(A) had set aside the order of the AO, passed consequent upon a notice under Section 148, making addition of Rs. 1,28.642.50.
(2.) THE facts, lie in the very narrow compass, in as much as, the assessee, at the relevant time, was sitting MLA, and former Chief Minister of the State, who had submitted his return of income, received by him as salary, and disclosing other incomes also, however notice under Section 148 was issued for the reason, that the assessee received a sum of Rs. 1.28.643 from the State Government, as reimbursement of medical expenses in the relevant previous year, which amount was contended to be, liable to be taxed, under Section 17, which had not been offered, for assessment in the return. The learned CIT(A), while allowing the appeal, examined the matter, and in para 9, noticed the contention of the assessee, that the amount received by the MPs and MLAs is not taxable under the head 'income form salary', but under the head 'income form other sources', has been accepted. In this regard, in para 10, it was held, that the undisputed point is, that the medical expenses, reimbursed by the Govt. of Rajasthan and Government of India, do not attract provisions of Section 17, as remuneration received by the assessee, as MLA, is not taxable under the head 'income from salary'. Thus, this aspect was found to be not requiring to be discussed in detail. Even though, notice under Section 148 was issued only on this premise. Yet, an argument was raised before the learned CIT about the taxability of medical reimbursement, under Sections 2(24)(iii)(a) and 2(24)(iii)(b) of the Act, but after examining this contention also, it was found, that the two clauses cover the special allowances, like city compensatory allowance, lunch allowance, and additional salary paid at hard stations, or for hard duties, by the employer. Thus, these clauses are also not attracted. Then yet another argument, raised on the anvil of Section 28(4)(b) [sic -s. 28(iv)] was also negatived, and by placing reliance on judgments of the Delhi High Court, and few judgments of the Tribunal, it was found, that taxing of reimbursement of medical expanses, would be contrary to the law. Thus, the addition of tax was set aside, and some more additions, which were proposed to be made, during course of appeal, were also declined.
(3.) THIS order has been affirmed in appeal by the Tribunal.;