TMI Blog1980 (10) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... which is Rs. 100 per month. This rent was fixed as the standard rent by the plant under r. 45A of the Fundamental Rules which have been applied to the officers. In other words, the rent of the quarter is Rs. 100 irrespective of the salary of the occupant. The salary payable to petitioner No. 2 works out to nearly Rs. 1,500 per month. Petitioner No. 2 is thus paying a rent which is less than one-tenth of, his salary. There are other officers employed in the Plant who are also occupying quarters and paying rent less than one-tenth of the salary of an officer. In deducting income-tax at source under s. 192 of the I.T. Act (hereinafter referred to as " the Act "), the management of the Plant is treating the difference between the one-tenth of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 192 in making the deduction at source, it is desirable that the question be decided in this petition under art. 226 of the Constitution. Section 17(1) of the Act defines " salary " to include, amongst others, perquisites. The definition of " perquisite " is contained in s. 17(2) which, in so far as relevant, reads as under: "(2) 'perquisite includes' (i) the value of rent-free accommodation provided to the assessee by his employer; a, (ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer; " Section 295(1) of the Act empowers the Board to make rules for carrying out the purposes of the Act. Section 295(2) enumerates various matters on which rules can be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordance with sub-clause (ii)(1) Plus 15 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; ...... (b) The value of residential accommodation provided at a concessional 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. " Sub-cl. (ii) of the definition of " perquisite " in s. 17(2) extends the meaning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise of the rule-making power conferred by s. 295(2)(c). The object of s. 3 is the determination of the value of the perquisite chargeable to tax. The rule operates at the stage when a finding is reached that the employee is in receipt of any perquisite as defined in s. 17(2). The rule cannot be used to determine whether the officer is really in receipt of any perquisite. The rule applies only for determining the value of the perquisite when the fact of receipt of perquisite is otherwise established. Rule 3(a) deals with the case when the employee is in occupation of rent free residential accommodation. If the fact that the employee is in occupation of rent-free accommodation is established, the value thereof would be calculated by applyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter of rent and no such deeming clause can be inferred from r. 3. Indeed, if r. 3 were to be so construed, it will go beyond the rule making power conferred by s. 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 No. 2 is 'directed' not to treat the difference between the rent actually paid and 10 per cent. of the salary as a perquisite in every case for purposes of deduction of income-tax. These shall be no order as to costs of this petition. The security amount shal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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