Medical reimbursement to employees is not a taxable perquisite for disallowance under the Income-tax Act.

Cash reimbursement of employees' medical expenses was treated as outside the value of any benefit, amenity or perquisite for disallowance under the Income-tax Act. Following its earlier rulings, the Calcutta High Court held that such reimbursement does not amount to expenditure resulting directly or indirectly in a perquisite within section 40(c)(iii) or section 40(a)(v). The court also noted that several High Courts had taken the same view, despite a contrary Full Bench view of the Kerala High Court. The issue was answered in favour of the assessee.

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Issues: Whether reimbursement of medical bills paid by the assessee to its employees constituted expenditure resulting directly or indirectly in the provision of any benefit, amenity or perquisite within the meaning of section 40(c)(iii) of the Income-tax Act, 1961.

Analysis: The Court followed its earlier decisions holding that cash reimbursement of medical expenses incurred by employees does not form part of the value of any benefit, amenity or perquisite for the purpose of disallowance under section 40(c)(iii) or section 40(a)(v) of the Income-tax Act, 1961. It noted that several High Courts had taken the same view, notwithstanding a contrary Full Bench view of the Kerala High Court.

Conclusion: Reimbursement of employees' medical bills was not includible as a benefit, amenity or perquisite, and the question was answered in the affirmative and in favour of the assessee.

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