Law: Income Tax Act, 1961

Section: 15,17,17(2),192

Law: Income Tax Rules, 1962

Section: 2

Income-tax----Salary---Perquisite--House rent---Accommodation provided by employer-­Perquisite only if rent charged by employer is concessional---Employer constructing houses in a particular location and rent charged rationalised--­No concessional rent when all employees are treated alike and standard rent charged---Department cannot ask employer to deduct tax at source treating standard rent as concessional rent---Revenue objecting that trade unions cannot espouse personal income-tax problems of employees---Not sustainable---Indian Income Tax Act, 1961, Ss. 15, 17(2) & 192---Indian Income Tax Rules, 1962, R.3. The, members of the Steel Executives' Association were the employees , of Rashtriya Ispat Nigam Ltd. (a Government of India undertaking); The employees of the Nigam were provided with residential accommodation. Up to April 1, 1990, 10 percent of the basic pay of each employee was deducted as the value of the accommodation provided by the employer. Under a memorandum of. settlement between the Nigam and the 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 issued notices to some of the employees stating that the difference between 10 percent of the salary and the standard rent paid by them was a perquisite under section 17(2) of the Income Tax Act, 1961, and had to be included in the income assessable under the head "Salary". This was contested in appeal and the appeals were allowed by the Deputy Commissioner (Appeals). However, the Income-tax Officer, Ward-6, TDS, 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,…

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