Medical reimbursement exemption bars Fringe Benefit Tax on amounts up to the statutory limit under the Income-tax Act.

Medical reimbursement up to Rs. 15,000 per employee per annum was held not chargeable to Fringe Benefit Tax under Section 115WB of the Income-tax Act, because a charging provision requires clear legislative authority and cannot be extended by implication. The Court noted that the proviso to Section 17(2) excludes such reimbursement from the definition of perquisite in the employee's hands, and it accepted the Karnataka High Court's view that the same amount could not be taxed as a fringe benefit in the employer's hands. The assessee therefore succeeded on the taxability issue.

---

---

Issues: Whether medical reimbursement up to Rs. 15,000 per employee per annum is chargeable to Fringe Benefit Tax under Section 115WB of the Income-tax Act, 1961.

Analysis: The Court held that taxation under a charging provision must rest on clear legislative authority and cannot be imposed by implication. It noted that the proviso to Section 17(2) excludes medical reimbursement up to Rs. 15,000 from the definition of perquisite in the employee's hands, and that the issue had already been answered by the Karnataka High Court in favour of excluding such reimbursement from Fringe Benefit Tax. Accepting that view, the Court concluded that medical reimbursement up to the exempt limit could not be brought to tax as a fringe benefit in the employer's hands.

Conclusion: Medical reimbursement up to Rs. 15,000 per employee per annum is not chargeable to Fringe Benefit Tax, and the assessee succeeds on the issue.

---