Independent welfare trust reimbursement is not a taxable perquisite where it does not arise from the employer-employee relationship.

Reimbursement of the cost of a deep freezer by an independent employees' welfare trust was not taxable as a perquisite under section 17(2)(iv) of the Income-tax Act, 1961, because the payment did not arise directly from the employer-employee relationship. The trust maintained separate accounts and exercised independent discretion in making grants and loans, so the receipt could not be linked to salary income. The amount was treated, at best, as a capital receipt and fell outside taxable salary. The addition was deleted.

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Issues: Whether reimbursement of the cost of a deep freezer by an employees' welfare trust constituted a perquisite taxable as salary under section 17(2)(iv) of the Income-tax Act, 1961.

Analysis: The reimbursement was not made directly by the employer but by a welfare trust treated as a separate entity with independent accounts and discretion in making grants and loans. On those facts, the amount could not be linked to a perquisite flowing from the employer-employee relationship. The receipt was at best a capital receipt and did not fall within the scope of taxable salary income under section 17(2)(iv).

Conclusion: The reimbursement was not a taxable perquisite and the addition of Rs. 16,000 was deleted in favour of the assessee.

Ratio Decidendi: A reimbursement made by an independent employees' welfare trust, and not by the employer as a benefit arising from employment, is not taxable as a perquisite under section 17(2)(iv) of the Income-tax Act, 1961.

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