The premium paid by the employer for personal accident insurance policy taken in the name of employee is not a perquisite in the hands of the assessee.

( 1 ) THE question raised in this reference made by the Income-tax Appellate Tribunal (Delhi Bench A) under Section 66 (1) of the Indian Income-tax Act, 1922, is not only interesting but important for its decision may have an effect on numerous policies of personal accident insurance taken by the employers for protecting themselves against the demands for payment of compensation to their employees. Several decisions were cited before us by counsel for the parties, but none of them had a direct bearing on the question. In a way therefore, it may be said, that the question is res Integra and its decision turns on the meaning of the word "perquisite" as used in Section 7 of the Indian Income-tax Act, 1922 which will hereafter be referred to as the Act.

( 2 ) THE question has arisen in connection with the assessment of the respondent who will hereafter be referred to as the assessee in respect of the assessment years 1959-60, 1960-61, 1961-62 and relates to his income under the head salary. The relevant previous years ended on 31-3-1959, 31-3-1960 and 31-3-1961 respectively.

( 3 ) THE respondent Lala Shri Dhar was a director of Madan Mohan Lal Sri Ram and Company (P) Ltd. which will hereafter be described as the "employer company. " He was stationed at the company s works at Calcutta. On 29-1-1957 the Board of Directors of the employer company decided by a resolution, to purchase personal accident insurance under a comprehensive policy in respect of the assessee and one other person, Lala Shri Ram. We are concerned in this case with the assessee only. The policy was effected on 3-2-1958 with the London and Lancashire Insurance Company Ltd. the premium payable being Rs. 1597. 19. The duration of the policy was one year.

( 4 ) THE Insurance company undertook to pay to the insured the benefits written in the schedule thereof if at any time during the period of the policy the insured, that is, Lala Shri Dhar, sustained any bodily injury caused by violent accidental, external and visible means and such injury resulted in his death or disablement as defined in the Schedule. In brief the insurance company agreed to pay a sum of Rs. 5 lacs in the case of injury causing death of the insured or resulting in the loss of both hands, or both feet or one hand or one foot or loss of sight in one eye or resulting in permanent total dis-ablement, and to pay smaller amounts for lighter injuries. Though the proposal appears to have been filled up and presented by the assessee, the premium was paid by the employer company in each successive year; the employer company directly instructed the insurance company to renew the policy for a further period of each year and paid the premium. That is how the question relates to three successive years.

( 5 ) ON the above facts the Income-tax Officer included the premium amount of Rs. 1597. 00 paid by the employer company on the afore- said policy as a "perquisite" in the hands of the assessee. There was however no discussion as to how and why this was being done by him.

( 6 ) THE assessee objected to the addition of Rs. 1597. 00 as perquisite in his hands in all the three years under reference, before the Appellate Assistant Commissioner on the ground that as the policy of insurance in question was general insurance policy, the premium paid for the same by the employer cannot be treated as a perquisite in his hands. In support of the said contention the assessee invited a reference to a letter written by Messrs Jardine Henderson Ltd. to Shri F. H. Vallibhoy, Commissioner of Income-tax, West Bengal on 16-3-1962 with reference to what was described therein as a similar policy of insurance taken by a company pursuant to a resolution dated 25-1-1956, where a general question regarding such policies was raised and to the reply of the Commissioner of Income-tax, West Bengal conceding that the policies in question were not life insurance policies but were general insurance policies and that the prem