STEEL EXECUTIVES ASSOCIATION Vs. RASHTRIYA ISPAT NIGAM LIMITED

JUDGEMENT

(1.) THESE four writ petitions seek a direction with reference to the inclusion of a perquisite value in respect of residential accommodation provided by the employer as part of taxable salary income while deducting tax at source.

(2.) WRIT Petition No. 4400 of 1996 has been filed by the Steel Executives' Association, Visakhapatnam. The members of the association are the employees of Rashtriya Ispat Nigam Limited (a Government of India undertaking) (for short "the Nigam"). It is stated that the employees of the Nigam were provided with residential accommodation. Upto April 1, 1990, 10 per cent. of the basic pay of each employee was deducted as the value of the accommodation provided by the employer. Under the memorandum of settlement between the Nigam and recognised trade union arrived at in April, 1990, the rates of house rent charged were brought on par with the rates charged for the Central Government employees under Rule 45-A of the Fundamental Rules and fixed as standard rents on the basis of the plinth area of the accommodation provided irrespective of the location of the accommodation anywhere in India. For the assessment year 1992-93, the Income-tax Officer, Ward-4, Visakhapatnam, issued notices to the some of the employees stating that the difference between 10 per cent. of the salary and the standard rent paid by them was a perquisite under Section 17(2) of the Income-tax Act and had to be included in the income assessable under the head "Salary". This was contested and in the appeal, all those appeals were allowed by the Deputy Commissioner (Appeals). However, the Income-tax Officer, Ward-6, TDS, Visakhapatnam, treated the Nigam as an assessee in default for not deducting the tax at source with reference to the said perquisite and levied a sum of Rs. 31.20 lakhs in respect of the assessment year 1994-95 corresponding to the financial year 1993-94. The Nigam filed an appeal which was dismissed. Thereupon, the Nigam issued a circular dated February 5, 1996, to the employees proposing to deduct the tax at source by including the said perquisite in the salary. Consequently, the writ petition has been filed for quashing the said circular.

(3.) WRIT Petition No. 33904 of 1997 has been filed by the trade union of Hindustan Shipyard. It is stated that upto April 1, 1990, ten per cent. of the pay was deducted from the employees' salary towards accommodation provided by the employer. But thereafter, the house rent was rationalised on par with the Central Government employees governed by Rule 45A of the Fundamental rules and accordingly only the standard rent was charged. For the assessment year 1996-97, Hindustan Shipyard included the difference between the standard rent and ten per cent. of the pay as a perquisite for the purpose of deduction of tax at source. It is claimed that there was no perquisite in providing accommodation on a standard rent and a direction is sought to that effect.