Perquisites added to income from other sources were held unsustainable where the amounts were only reimbursements.

Perquisites cannot be added to income from other sources unless the Act specifically authorises such inclusion under the relevant charging provisions, such as section 17(2) for salary or section 28(iv) for business income. Where the Managing Director's remuneration was assessed under income from other sources, medical reimbursement, leave travel assistance, electricity and water charges, and chauffeur-driven car expenses were treated as reimbursements rather than taxable perquisites. In any event, corresponding expenditure deductions would be available under section 57. The additions as perquisites were therefore not sustainable, and relief was granted to the assessee.

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Issues: Whether the amounts received as medical reimbursement, leave travel assistance, electricity and water charges, and chauffeur-driven car expenses could be added as perquisites in computing the assessee's income, and whether any such amounts were nonetheless deductible where received as reimbursements.

Analysis: The remuneration received by the assessee as Managing Director was assessed under the head "income from other sources". The scheme of the Act permits inclusion of perquisites only where they fall within the relevant charging provisions for salary, business income, or other heads specifically covered by the Act, including section 17(2) and section 28(iv) of the Income-tax Act, 1961. No provision was found authorising inclusion of perquisites while computing income from other sources. In any event, the impugned amounts were only reimbursements of expenditure incurred by the assessee, and an equal deduction would be available under section 57 of the Income-tax Act, 1961.

Conclusion: The additions as perquisites were not sustainable, and the assessee was entitled to relief. The issue was decided in favour of the assessee.

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