Reimbursement of Credit Card Payments Incurred by Director on behalf of the Company during Foreign Visits is not Taxable as Perquisite: ITAT [Read Order]

In Gaurav Seksaria v. ITO, the Kolkata bench of the ITAT observed that reimbursement of credit card payments incurred by the Director on behalf of the Company to meet the business expenditure during his foreign visits cannot be taxable as ‘perquisites’ under the provisions of the Income Tax Act, 1961.

Assessee, a Director of M/s Govind Steel Co. Ltd, incurred expenses through his credit card during foreign travel visits on behalf of the Company. The Company paid all these amounts (by way of reimbursement) directly to credit card bankers. The assessing Officer alleged that these expenditures were of personal nature and requires to be added as perquisite in the hands of the assessee employee as the employer had met the personal obligation of the employee assessee and accordingly added 50% of the total expenditure on estimate basis.

Before the Tribunal, the assessee argued that the said amount was specified in the FBT return under the head ‘Tour and Travel including foreign travel’ and therefore, it cannot be treated as perquisite.

The bench relied on the Circular No. 8/2005 dated 29.8.2005, and observed that there cannot be any element of perquisite to be taxed in the hands of the assessee employee.

Accepting the contentions of the assessee, the bench ruled that “In any case, if at all, there is no doubt in the mind of the revenue with regard to the subject mentioned expenses, the revenue could examine the same only in the hands of the company M/s Govind Steel Co. Ltd and not in the hands of the assessee employee.”