Normally any amount received by an employee from his employer is to be considered as income, like salary, bonus, commission etc., but any expenditure incurred by an employee, on behalf of employer and when it is repaid by employer to employee is not considered as income of employee.
Gujarat High Court has delivered a judgment in the case of Commissioner of Income Tax Vs. S. G. Natale (124 ITR 391) that any expenditure incurred by an employee on behalf of employer, which was reimburse by employer is not to be considered as income of employee.
In the case of J. S. Bindra Vs. Inspecting Assistance Commissioner 18 TTJ 27 Allahabad it has been that General Manager of Company has paid the expenditure of get to gather of invitees, which was reimburse by the company is not taxable in the hands of general manager.
Scholarship of Employees children:
Sometimes employer pay scholarship for study of employees children. Income tax Officer has considered this as income of employee. Tribunal is also of the same view that amount of scholarship is not benefit in terms of Section 17(2) (iii) and considered as income. According to assesse it is exempt under section 10(16).
After considering the arguments of both the party, High Court says that the amount of scholarship paid to the children of assesse was not a perquisite given to assesse. If it is considered as perquisite it will be exempt under section 10(16) of the Act.
Another judgment in favor of assesse Commissioner of Income Tax Vs. B. L. Garg (289 ITR 218) Allahabad High Court the similar issue was there and decide the judgment in favor of assesse, “ We have carefully examined the cases referred by assesse and we find that there is not even a whisper in any of these cases with respect to provision of Section 10(16) of the Act, which is presently involved.
Stipend received by trainee is taxable?
We know that since long the trainee of Medical and Accounting students are getting stipend during their training period.
Whether the amount of Stipend is to be considered as income?
Kerala High Court in the case of A. Ratnakar Rao Vs. Addl. CIT (128 ITR 527) and Madras High Court in the case of CITY Vs. V. K. Balchandran (147 ITR 4),
Whether the sum received by the assesse in the course of internship in the Worcester City Hospital is income of assesse?
Contended that the amounts received by the assesse were really in the nature of scholarships granted to him for the purpose of meeting the cost of education falling under section 10(16) of the Act and, therefore, not includible in the computation of the total income of the assesse.
Sudhirkumar Sharma Vs. Income Tax Officer (17 TTJ 226) Jaipur amount received by an article from a Chartered Accountant as Stipend is not considered as income of article, as it is to be spent for the purpose of books, coaching fee and institutes fee, exam fee etc.
Looking to the above judgments, it is very clear that either Reimbursement or Scholarship or Stipend are not considered as income but are exempt under section 10(16) of the Act.
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