Law:

Section:

Section 17(2)(iii)(c) of the Income-tax Act, 1961 - Salary - Perquisite - Under a scholarship scheme for benefit of children of its managing staff, assessee's employer company granted a scholarship to assessee's children - Grant of scholarship was at sole discretion of company and no member of staff had right to claim any scholarship for his children - Moreover, scholarship was paid directly to children - Whether impugned scholarship paid to assesses children was a perquisite in assesee's hands under section 17(2)(iii)(c) - Held, on facts, no Section 256 of the Income-tax Act, 1961 - Reference - General principles - Whether it is open to non-applicant assessee on a reference application by aggrieved party, i.e., revenue, to raise a question on its submissions negatived by Tribunal in deciding appeal even though such appeal was decided entirely in assessee's favour - Held, yes Section 10(16) of the Income-tax Act, 1961 - Exemptions - Scholarships - Whether in view of facts mentioned under the head 'Salary - Perquisite' scholarship granted by company to assessee's children was exempt under section 10(16) - Held, on facts, yes Facts The assessee was an employee in a company, which had instituted a scholarship scheme for the benefit of the children of the managing staff in respect of their education. The grant of scholarship was in the sole and uncontrolled discretion of the company and no member of the managing staff had any right to claim such scholarships for his children. There was no reference in the terms of employment of the assessee to any such scholarship scheme. Two children of the assessee received a certain amount as scholarship and the ITO included such scholarship amounts as perquisite in the assessment of the assessee, holding that the benefit to the children arose out of the source of the employment. The Tribunal held that though the impugned amount was not exempt under section 10(16), section 17(2)(iii ) was not attracted as the terms of the scholarship did not confer any right on the part of the assessee to expect the company to pay any scholarship to the children of the assessee and, hence, the scholarships received by his children could not be…

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