P N TIWARI Vs. UNION OF INDIA

JUDGEMENT

(1.) This writ petition and connected writ petitions are being disposed of by a common judgment. The petitioner is challenging the validity of Notification dt. 25th Sept., 2001 (Annex.-1 to the writ petition), by which Rule 3 of the IT Rules, 1962, was substituted by the Income-tax (22nd Amendment) Rules, 2001 issued by the CBDT. The petitioner is also challenging the validity of Section 17(2)(vi) of the IT Act, 1961, as inserted by the Finance Act, 2001 on the ground that it has delegated essential legislative powers and that it is violative of Articles 19(1) and 246 of the Constitution. We have heard learned counsel for the parties.

(2.) It is alleged in para. 2 of the petition that the petitioner is an association of officers of Airport Authority of India.

(3.) Before dealing with the controversy in this case, we may refer to Section 17(2)(vi) of the IT Act which states that for the purposes of Sections 15 and 16 and of that section perquisite includes "value of any other fringe benefit or amenity as may be prescribed". The expression the "value of fringe benefit or amenity as may be prescribed" was inserted by Finance Act, 2001, w.e.f. 1st April, 2002. Before the above amendment by Finance Act, 2001, Clause (vi) was not there in Section 17(2) of the Act. Hence, before the aforesaid amendment Section 17(2) which defines perquisite read as follows : "(i) the value of rent-free accommodation provided to the assessee by his 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 paras, (a) and (b) of this sub-clause do not apply and whose income under the head "Salaries" (whether due from, or paid or allowed by one or more employers) exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds twenty-four thousand rupees. Explanation : For the removal of doubts, it is hereby declared that the use of any vehicle provided by a company or an employer for journey by the assessee from his residence to his office or other place of work, or from such office or place to his residence, shall not be regarded as a benefit or amenity granted or provided to him free of cost or at concessional rate for the purposes of this sub-clause. (iv) any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee, and (v) any sum payable by the employer, whether directly or through a fund, other than a recognized provident fund or an approved superannuation fund or a Deposit-linked Insurance Fund established under Section 3G of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, or as the case may be, Section 6G of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, to effect an assurance on the life of the assessee or to effect a contract for any annuity;" Thus before the amendment by Finance Act, 2001, a perquisite was whatever was mentioned in the Act itself, i.e., in Section 17(2). In other words, before the amendment by Finance Act, 2001, the perquisites were not determined by delegated legislation by rules made under the Act. Hence, before the amendment by Finance Act, 2001, interest-free loans given by the employer to the employees for various purposes e.g., purpose of car, house, etc. were not treated as a perquisite since that was not provided in the Act.