Case Law Details
The decision of CIT Vs. America Counting Corporation 123 ITR 513, noted above also supports the view that taxes paid on behalf of the assessee is a perquisite or a benefit, but not income from business. It could not be taxed except under clause (iv) of Section 28 which provided that a benefit or perquisite was liable to be charged to tax.
It is not money, which is paid to the assessee when taxes are paid on his behalf, it is discharge of his obligation. The payment fully fits in the jacket of sub-clause (iv) of section 17(2) of the Act, it may be a monetary gain or monetary benefit or a monetary allowance but definitely it is not a monetary payment to the assessee. What is excluded in the clause is the perquisite in the shape of a monetary payment to the assessee. If it is a payment to a third person like payment of taxes to the government, then such payment of taxes cannot be excluded under clause 10(10CC). The circular of the Board and provision of sub-section (1A) of Section 192, section 40(a)(v), 195A fully support the claim of the assessee. We, therefore, hold that the taxes paid by the employer on behalf of the employee is a perquisite within the meaning of section 17(2) of the Income-tax Act, which is not provided by way of monetary payment. Therefore, there is no reason not to exclude such payment of taxes from the total income of the assessee. In other words, taxes paid by the employer can be added only once in the salary of the employee. Thereafter, tax on such perquisite is not to be added again. We, therefore, find substance in the contention advanced on behalf of the learned counsel for the assessee and /the interveners. The question referred to us is answered in favour of the assessee. The appeals of the assesses and interveners are “allowed” on this issue.”
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA No. 4444 & 4445/D/2011
Assessment Year: 2008- 09
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