TMI Blog2003 (9) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... h . It is also relevant to state here that in certain writ petitions apart from the aforesaid prayer other reliefs have also been sought. As the basic question was common to all the writ petitions they were heard analogously. For the sake of clarity and convenience we are inclined to adumbrate the facts as have been put forth in Writ Petition No. 278/02. 2. The petitioner No. 1 is a registered association of the officers' employed in the Coal Mines of the Northern Coal Fields Ltd. in different projects at Singrauli area of Aidhan Tahsil of Sidhi District. The petitioner No. 2 is an employee of the Northern Coalfields Ltd. Respondent No. 2 is a subsidiary of Coal India Ltd. a government undertaking. It is put forth that the respondent No. 2, company has constructed about 20,000 residential units in different mining projects which are allotted in favour of its employees. Out of the same about 1400 residential units are occupied by the members of the petitioner association. Some of the residential units are also allotted to the Central Government and State Government employees, Banks and employees of other public undertakings providing services to the respondent No. 2. Standard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cupants is not correct. It has also been emphatically put forth that the rent recovered by the employer from the employees in the shape of license fees is far less from the actual rent and submission that there is no concession in the matter of rent is totally incorrect. Definition of salary has been taken aid of to show that the salary includes the value of any perquisite or profit in lieu of salary is taxable under clauses (2) and (3) of section 17. It has also been averred that the rule 3 is in consistent with section 17(2) of the Act and the respondent No. 1 is empowered by section 295(2) of the Act to amend the Rules. It is set forth that the rule making authority has not travelled beyond the rule making power and in fact a rule has been brought into being to usher in the concept of uniformity. Quite apart from the aforesaid stance various other averments have been pleaded in support of the rule in question. 5. We have heard Mr. H.S. Shrivastava, learned senior counsel with Mr. Sandesh Jain for the petitioner in some writ petitions and we have also been addressed by Mr. Sumit Nema. We have heard Mr. Rohit Arya learned senior counsel with Mr. Ajit Ade for the respondents 1 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he some people might be affected but such a harshness is quite expected while reframing the rule under the taxing statute. The learned counsel has further canvassed that while conceiving the idea of uniformity enough guidance has been penetrated into the Rules and it cannot be held to be arbitrary as free play at the joints are to be allowed in respect of a rule which pertains to the fiscal. Learned counsel has further submitted that the present rule has been declared intra vires by other High Courts. He has commended us to the decisions rendered in the cases of Aditya Cement Staff Club v. Union of India (2003) 131 Taxman 609 (Raj.) and BHEL Employees Association v. Union of India [2003]261ITR15(KAR) . 9. To appreciate the rival submissions raised at the Bar it is appropriate to refer to the unamended rule 3 of the Income Tax Rules. It reads as under : Valuation of perquisites.For the purpose of computing the income chargeable under the head 'Salaries', the value of the perquisites (not provided for by way of monetary payment to the assessee) mentioned below shall be determined in accordance with the following clauses, namely: (a) The value of rent-free residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is unfurnished, 10 per cent of the salary due to such person or officer, as the case may be, in respect of the period during which the said accommodation was occupied by him during the previous year: Provided that where the assessee claims and the assessing officer is satisfied that the sum arrived at on the aforesaid basis exceeds the fair rental value of the accommodation, the value of the perquisite to the assessee shall be limited to such fair rental value; (2) if the accommodation is furnished, an amount calculated in accordance with sub-clause (ii)(1) plus 10 per cent per annum, of the original cost of the furniture (including television sets, radio sets, refrigerators, other household appliances and air-conditioning plant or equipment) or if such furniture is hired from a third party, the actual hire charges payable therefor; (iii) in any other case, (A) the value of rent-free residential accommodation which is not furnished shall ordinarily be a sum equal to 10 per cent of the salary due to the assessee in respect of the period during which the said accommodation was occupied by him during the previous year: Provided that (1) where the fair rental valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional rent shall be determined as the sum by which the value computed in accordance with clause (a), as if the accommodation were provided free of rent, exceeds the rent actually payable by the assessee for the period of his occupation during the relevant previous year. 10. This court in the case of Officers' Association, Bhilai Steel Plant (supra) while interpreting the said rule has held as under : Sub-clause (ii) of the definition of 'perquisite' in section 17(2) extends the meaning of that term by including therein 'the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer'. It is 'any concession in the matter of rent' which falls within this clause. If the employer gives no concession to the employee in the matter of rent, there can be no question of any perquisite. A case of concession in the matter of rent would arise when the rent normally payable for the accommodation is higher than the rent paid. The definition of 'perquisite' does not say that if the rent paid by the employee is less than 10 per cent of his salary, the difference will be deemed as perquisite. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncession in the matter of rent, would depend upon two factors: (i) the normal rent for the accommodation in occupation of the employee, and (ii) rent actually paid by the employee. If the employee is paying that rent which is the normal rent of the accommodation in his occupation, it cannot be said that he is receiving any concession in the matter of rent even though the rent paid by him is less than 10 per cent, of his salary. As earlier pointed out, there is no deeming clause in the definition of 'perquisite' contained in section 17(2) that once it is established that an employee is paying rent less than 10 per cent of his salary it must be deemed that he is receiving a concession in the matter of rent and no such deeming clause can be inferred from rule 3. Indeed, if rule 3 were to be so construed, it will go beyond the rule making power conferred by section 295(2) and would become invalid. We are, therefore, clearly of opinion that the management of the plant was not right in treating in every case the difference between 10 per cent of the salary and the rent actually paid as a perquisite for the purposes of deduction of Income Tax. The petition is allowed, Respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer, or ( i ) 10% of salary in cities having population exceed- ing 4 lacs as per 1991 census; ( ii ) 7.5% of salary in other cities, in respect of the period during which the said accommodation was occupied by The value of perquisite as determined under col. (3) and increased by 10% per annum of the cost of furniture (including Television sets, radio sets, refrigerators, other household appliances, air- conditioning 1 2 3 4 the employee during the previous year as reduced by the rent, if any, actually paid by the employee. plant or equip- ment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year. ( b ) Where the accommodation is taken on lease or rent by the employer Actual amount of lease rental paid or payable by the employer or 10% of salary whichever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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