An order issued by the Central Board of Direct Taxes, as Memo No. CCIT/RAN/Tech./17(2)/2019-20, dated 22 July 2019. Issued under proviso to section 17(2), clause (ii), sub-clause (b), read with rules 3A(1) and 3A(2).
An approval letter from the Chief Commissioner of Income-tax, Ranchi — not from the Board. It approves a private hospital for the purposes of the proviso to section 17(2) of the Income-tax Act, 1961, read with rule 3A of the Income-tax Rules, 1962. The effect of an approval of this kind is that an employer's expenditure on an employee's treatment at that hospital falls within the proviso rather than being charged as a perquisite. It is a single-hospital, time-limited grant.
This is an order of the Board. An order is issued under a power the Act itself gives the Board — most often section 119, which lets it direct its own officers and, in the cases the section names, relax a requirement. Read the enabling words before deciding how far it reaches: the power is administrative, and it cannot rewrite the charge.
The Chief Commissioner grants approval to Samford Hospital Pvt. Ltd., Kokar Chowk, Ranchi, exercising the power under sub-clause (b) of clause (ii) of the proviso to section 17(2) and having regard to the guidelines in rule 3A(1) and rule 3A(2). The approval runs for three years from the date of issue and is not transferable. The hospital must submit to inspection by authorised income-tax officers, continue to satisfy the rule 3A(2) conditions, and apply for renewal not less than thirty days before expiry. The approval is liable to be withdrawn if a condition ceases to be met or if it was obtained on a misstatement of facts.
An employer's payment for an employee's medical treatment is a perquisite under section 17(2) unless the hospital is one approved for the purpose. Approval is given hospital by hospital, on the hospital's application, by the Chief Commissioner of the charge applying the rule 3A criteria. This letter disposes of one such application from a hospital at Ranchi, and its practical effect is felt by the employees treated there and by their employers deducting tax on salary.
The letter binds the income-tax authorities of the Jharkhand charge for as long as it stands: they cannot treat the hospital as unapproved while the approval is in force. It obliges nobody else. And it decides no question of law — whether a payment is medical expenditure within section 17(2) at all is for the Assessing Officer on the facts and, ultimately, for the Tribunal, which is not bound by an approval letter.
Three years from the date of issue, 22 July 2019.
Check that the approval was current for the year in question, and remember it is confined to the named hospital. The subject line as printed refers to clause (vii) while the operative sentence refers to clause (viii) of section 17(2); read the operative sentence. This is a Chief Commissioner's order for one charge, not a Board circular.
having regard to the guidelines prescribed in rule 3A(1) & 3A(2) of the Incometax Rules, 1962 for the grant of approval to a hospital, hereby grant approval to Samford Hospital Pvt. Ltd., Kokar Chowk, Ranchi
— the Central Board of Direct Taxes, order Memo No. CCIT/RAN/Tech./17(2)/2019-20, 22 July 2019. Read it in the department’s own PDF.
| Under the Income-tax Act, 1961 | Now, in the Income-tax Act, 2025 |
|---|---|
| section 17 | section 16, section 17, section 18 |
My employer gave me a concessional staff loan. Is the interest I saved taxable as a perquisite?
My employer gave me a company flat at a low licence fee and now adds a perquisite value to my salary under Rule 3. Can I say there was no concession at all?
My employees exercised stock options but the shares are locked in and non-transferable. Was I supposed to deduct tax on the market value less what they paid?
My employer pays part of the premium on a superannuation policy, but I get nothing unless I stay until retirement. Is that contribution taxable as a perquisite in my hands now?
My Indian contract says my pay is free of Indian tax and the Indian company pays the tax for me. Is that tax itself taxable in my hands?
We pay our salesmen a turnover commission on top of salary and contribute to the provident fund on both. Is the contribution on the commission deductible?
What here is the Board’s and what is ours. The document is the Central Board of Direct Taxes’ own. Its number, its date and the words quoted above are reproduced from the Board’s own PDF, which is here. Everything else on this page is ours: the plain-English account of what the document is and what it does, the reading of which provision it turns on, the note on what to watch, and the choice of cases. Where our account and the document part, the document governs.
An order of the Board binds the department, not you and not a court. The Board writes to its own officers. An assessee may hold the department to an order or an instruction that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves. This is the most common mistake made with this material, and it is worth making twice: a direction of the Board is not a section of the Act.
We did not read all of it. The department’s file returned only part of this document to us, so what is written above is written from the part we could read. Open the PDF before you rely on it.
What we could not settle. The memo number's trailing serial is not legible on the scan and is recorded only as far as it can be read. The department lists the letter under 29 July 2019; the date printed on it reads 22 July 2019, and that is the date recorded here. The conditions were read in summary rather than word for word.