Law:

Section:

Section 17 of the Income-tax Act, 1961, read with rule 3 of the Income-tax Rules, 1962 - Salaries Perquisites - Rule 3 was substituted with retrospective effect by Notification No. SO 940(E), dated 25-9-2001 - As per said rule for purposes of valuation of perquisites relating to accommodation, employees have been classified into two categories, namely, Government (Central and State) employees and others - According to revenue to maintain continuity and equity with their remuneration and a variety of other benefits available in other sectors, earlier system of valuation of perquisites relating to accommodation on basis of rent payable as per rules framed by Government has been retained for Central and State Government employees and for others, that is, employees belonging to private as well as public sector undertakings, it has been decided that valuation of perquisite relating to accommodation should be 10 per cent or 7.5 per cent of salary as the case may be - Whether looking to reasonableness of classification between cities with population of less than four lakhs and others with bigger populations, no unreasonableness could be found in value being fixed at 7.5 per cent and 10 per cent respectively of salary - Held, yes - Whether amended rule 3 does appear to be a step in right direction especially when looking to simplification aspect of same and accordingly, impugned notification does not suffer from any arbitrariness - Held, yes - Whether since in view of CBDT's Circular No. 15, dated 12-12-2001 option has clearly been given to assessee to compute value of perquisites at his option for period beginning 1-4-2001 and ending 30-9-2001 in accordance with rules as stood prior to impugned amendment, impugned rule does not suffer from vice of retrospective application on ground that same tending to prejudicially affect rights of assessees - Held, yes Circulars & notifications - CBDT Circular No. 15/2002, dated 12-12-2001 and Notification No. SO 940(E) , dated 25-9-2001 FACTS Serial No. 2 of Table I of the newly introduced rule 3 by virtue of CBDT's Notification No. SO 940(E), dated 25-9-2001 relates to the category of the perquisite (accommodation), provided…

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