Obul Reddy, C.J.
1. The facts leading to this reference are these : The assessee is an officer of the British India Tobacco Corporation Private Ltd., Guntur. The chairman of the British India Tobacco Corporation Private Ltd., at London, invited the assessee to visit London and Canada in connection with the business of the company. The company wanted the assessee and his wife to undertake the tour, and the expenses incurred both by the assessee and his wife were met by the company. So far as the expenditure incurred on the assessee was concerned, it was treated as business expenditure in the hands of the company. That expenditure was not treated as a perquisite of the assessee. The ITO thought that the expenditure relating to the assessee's wife would come within the meaning of 'perquisite' under Section 17 of the I.T. Act, 1961, and added that amount to the income of the assessee. It may be relevant to say that in so far as the company's assessment is concerned, the expenditure incurred on the assessee on his business tour was allowed as a business expenditure ; but the expenditure incurred by the company on the assessee's wife on the business tour, was disallowed on the ground that that amount was not expended for business purposes. In this reference, we are not concerned with the assessment of the British India Tobacco Corporation Private Ltd. The AAC, to whom the assessee preferred an appeal, allowed his appeal deleting the amounts added to the income of the assessee by the ITO under the head 'perquisites'. That led to the revenue preferring an appeal before the Tribunal. The Tribunal affirmed the order of the AAC. Hence, the following question has been referred at the instance of the Addl. Commissioner of Income-tax :
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in deleting the additions of Rs. 18,102 and Rs. 6,007 for the assessment years 1968-69 and 1969-70, respectively ?'
2. Mr. Rama Rao, learned counsel for the revenue, invited our attention to Section 17 of the Act to contend that the expenditure incurred on the wife of the assessee during her foreign tour comes within the definition of 'perquisite'. Section 17, to the extent it is relevant for our discussion, reads 1
'17. For the purposes of Sections 15 and 16 and of this section,--
(1) 'salary ' includes--...
(iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;...
(2) 'perquisite' includes-
(i) the value of rent-free accommodation provided to the assessee byhis employer ;
(ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer ;
(iii) the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases-
(a) by a company to an employee who is a director thereof ;
(b) by a company to an employee being a person who has a substantial interest in the company;
(c) by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub-clause do not apply and whose income under the head 'Salaries', exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds eighteen thousand rupees ;... '
3. It is the case of the revenue that the expenditure incurred was in the nature of a benefit provided to the assessee and, therefore, the Tribunal was not justified in deleting the additions of Rs. 18,102 and Rs. 6,007. Section 17 applies only in so far as the perquisites provided or allowed to the assessee are concerned. The perquisites, if any, provided to the wife of an assessee independently, cannot be included as perquisites of the assessee. This is not a case where any benefit was granted or provided by a company to its employee, who is a director thereof or who has a substantial interest in the company nor to an employee to whom Sub-clauses (a) and (b) do not apply. The wife of the assessee, by any process of reasoning, cannot be brought within the ambit and scope of 'an employee' referred to in Sub-clause (a), (b) and (c). The benefit of perquisites should be granted or provided free of cost only to the employee and not to any member of his family.
4. In this case, the assessee did not, of his own accord, ask his wife to accompany him when he was sent by the company on a business tour of United Kingdom and Canada. It is the company that desired that the assessee's wife should also join him in the tour for the reason stated by it in its letter to the assessee. The relevant portion of the letter, as quoted by the Tribunal, reads :
'I am particularly asked to emphasise the idea that as you are to assume additional responsibilities as regards export, it is not only advisable but essential that your wife joins you to these trips. It is needless for me to say you will be required to entertain several business-guests and you know the names. I have no doubt you and your wife will be welcomed by all our business friends in London and Canada.'
5. It is under the company's request that the wife of the assessee accompanied him on his business tour to London and Canada. The expenditure incurred by the wife was met by the company and not by the assessee. The deduction claimed by the company in respect of the expenses incurred by it on the foreign tour of the assessee's wife, were disallowed by the department and that has become final. When no part of the expenditure of the wife of the assessee was met by the assessee or given to him by the company and the entire expenditure involved was met by the company, we are unable to understand how the foreign tour of the wife of the assessee at the cost of the company can be brought within the ambit of the definition of 'perquisite' under Section 17.
6. Mr. Rama Rao, however, sought to place reliance upon the decision of the Madras High Court in C. Lakshmi Rajyam v. CIT : 40ITR340(Mad) . The essential difference between that case and the present one is that the payments were made in that case to the assessee, Lakshmi Rajyam. There was an agreement between the assessee and her employer and the terms therein were specific that the payment thereunder was made to the assessee as an employee by way of additional remuneration in respect of her employment. The Madras High Court, therefore, held that there could be no doubt that the income under the terms of the document accrued to her by virtue of her having acted in the film and 'that would preclude the idea of any testimonial gift, as in the words of the Master of the Rolls in Moorhouse v. Dooland : 28ITR86(Cal) as to the alternatives between a case of remuneration and personal gift: .....'
7. The relevant portion of the letter of the company quoted above will amply establish that it is the company that insisted upon the assessee's wife joining him on his foreign tour to entertain several business guests abroad and that it had undertaken to meet the expenditure involved in that behalf. Therefore, the expenditure incurred by the company on the wife of the assessee cannot be treated as an income accruing to the assessee or a benefit provided to him.
8. For the above reasons, the question referred to us is answered in the affirmative and against the revenue with costs. Advocate's fee Rs. 250.