1. This appeal has been filed by the assessee against the order dated 14-9-1981 of the AAC relating to the assessment year 1977-78.
2. The assessee is an individual deriving income from salary and other sources. The only dispute in this appeal relates to the taxation of a sum of Rs. 25,000 as perquisite under Section 17(2)(iii) of the Income-tax Act, 1961 ('the Act'). The assessee is the managing director of a private limited company engaged in advertising and publicity business. He was already a member of the Bombay Gymkhana Club since 1960. During the year under consideration, the assessee became the life member of Wellington Sports Club, by paying a sum of Rs. 25,000. The case of the assessee was that it would take a very long time to become an ordinary member and so he had to become the life member by paying a sum of Rs. 25,000. Further, it was in the interest of the business carried on by the company that he had to become a member and so, the membership fee of Rs. 25,000 was paid by the employer-company. The assessee, therefore, urged that being a life member of the Willington Sports Club was not a benefit or amenity accruing to him, as it was wholly and exclusively meant for furthering the business interests of his employer. The ITO did not agree. He assessed the sum of Rs. 25,000 as perquisite in the hands of the assessee.
3. The assessee appealed to the AAC and contended that the action of the ITO was not justified. The AAC, however, observed that it is absurd to think that the assessee was not in any way benefited by becoming the member of the Willington Sports Club. Hence, he held that the sum of Rs. 25,000 paid by the employer of the assessee towards the life membership fees of the assessee in the Willington Sports Club was, indeed, rightly taxed by the ITO as perquisite within the meaning of Section 17(2)(iii).
4. In this further appeal before us, Shri B.K. Khare, the learned representative for the assessee, urged before us that the revenue authorities erred in their decision. He stated that the assessee was already a member of the Bombay Gymkhana Club and that membership was meant for his personal amusement or benefit He had no further time to attend to other clubs for his personal amusements. It was entirely for the business interests of the employer-company that the assessee had to join the prestigious Wellington Sports Club, where one comes into contact with the leaders of the industry and commerce, so that advertising and publicity business carried on by the employer-company got a boost because of the contacts developed through the membership of the aforesaid club. He emphasised the fact that the membership of Willington Sports Club did not confer any amenity or benefit to the assessee. Further, he pointed out that the expense under consideration has been allowed in the file of the company by the Commissioner (Appeals) and the Tribunal in the case of the company has held the same to be an expense incurred wholly and exclusively for the business carried on by the company, as per their order dated 8-3-1983 in IT Appeal No. 3404 (Bom.) of 1981. He pointed out that the ITO did not invoke either Section 40(c) or Section 40A(5) of the Act in the case of the company, which fact showed that the expense under consideration was not considered by the ITO to be a perquisite for the purpose of those sections in the assessment made on the employer-company. Taking us through the language of Section 40(c), he pointed out that it speaks of 'any expenditure resulting directly or indirectly' in contrast to the language 'any benefit or amenity granted by a company to an employee', which fact showed that the ambit of Section 40(c) was much wider than that of Section 17. His point was that if a certain amount has not been caught under Section 40(c), it could never be caught within the purview of Section 17, having a narrower ambit. In this connection, he pointed out to the decision of the Delhi High Court in the case of CIT v. Lala Shri Dhar  84 ITR 192, wherein the insurance premium paid by the employer on the life of an employee has been held as not amounting to a perquisite in the hands of the employee. In the alternative, he urged that in case his main argument is not accepted, then the whole sum of Rs. 25,000 could not be said to have enured to the benefit of the assessee. At the worst, he argued that only a small portion of the aforesaid sum of Rs. 25,000 may be stated to have enured to the benefit of the assessee. He relied on the English decision in the case of Westcott (Inspector of Taxes) v. Bryan  75 ITR 202 (CA) in support of his proposition. However, he emphasised the fact that his case is that no portion of the said sum of Rs. 25,000 could be regarded as a benefit or amenity which accrued to the assessee. He pointed out to the progressive increase in the business of the employer-company after the assessee became a member of the Willington Sports Club, namely, from Rs. 96.25 lakhs in 1974-75 to Rs. 270.22 lakhs in 1978-79.
5. Shri G. Krishnan, the learned representative for the department, on the other hand, supported the orders of the revenue authorities. He took us through the language of Section 17 and urged that the definition of the term 'perquisite' given in Section 17(2) enlarges the ordinary meaning of salary so as to include the amenity or benefit provided by the employer to an employee who is a director. He stated that in a place like Bombay, being a member of a prestigious club like Willington Sports Club did result in a personal benefit to the person who became a life member of the said club. He stated that the assessee could leave the company and still enjoy the benefits of life membership, because it was he who was a member in his personal capacity. He referred to the English decision in the case of Rendell v.Went (Inspector of Taxes)  58 ITR 73 (HL) for the proposition that the perquisite enjoyed by the assessee could not be bifurcated into two portions-one relating to the business of the employer and the other relating to the personal benefit of the employee. He also referred to the decision in the case of CIT v. P.R. Ramakrishnan  124 ITR 545 (Mad.) for the proposition that the amount of perquisite in the hands of the employee will be the same as the amount of expenditure in the hands of the employer.
6. We have considered the contentions of both the parties as well as the facts on record. The short question that is raised in this appeal is whether the sum of Rs. 25,000 paid by the employer of the assessee towards his life membership in a club, could be regarded as a perquisite in the hands of the assessee. In our opinion, considering the peculiar facts and circumstances of this case, it cannot be so regarded. Firstly, the assessee was already a member of another club for his own personal amusement so that it cannot be said that the membership in the second club was meant for his personal benefit or amusement. In any case, the burden is on the revenue to show that the amount sought to be taxed by it is really taxable ; in other words, the expenditure under consideration really resulted in any benefit or amenity to the assessee. We do not find any evidence on record to suggest that the assessee became a member of the second club for any purpose other than the furtherance of the business interests of his employer-company. Secondly, there is force in the contention that the ITO has not invoked the provisions of Section 40(c) or Section 40A(5) in the case of the company, which fact evidently shows that he did not consider this expenditure as a perquisite at all. Hence, it is not open to the department now to turn round and say that the same amount is perquisite. Thirdly, the Tribunal in the case of the company has held that the expenditure under consideration was spent wholly and exclusively for the purpose of the business carried on by the employer-company and it was neither a personal expenditure nor a capital expenditure. If that be so, then there is hardly any scope to hold that the expenditure also conferred any benefit or amenity to the assessee, especially when he is already a member of another club nearer to his place of residence and there is nothing on record to show that the assessee always attended the Willington Sports Club for his personal amusement in preference to the Bombay Gymkhana Club, of which he was a member since several years past. Hence, we come to the conclusion that the revenue has not been able to show that the sum of Rs. 25,000 spent by the employer of the assessee, to make the assessee a life member of the Willington Sports Club, in the interests of the business carried on by the employer conferred any benefit or amenity to the assessee. Hence, there was no justification to tax the said sum as perquisite in the hands of the assessee. We, therefore, delete the same. In view of this conclusion of ours, it is not necessary to go into the alternative contention raised for the assessee regarding bifurcation of the amount of Rs. 25,000.