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W.P. No.278/2002
30.06.2010.
Shri H.S.Shrivastava,Sr.Advocate with
Shri Sandesh Jain, Adv.for petitioner.
Shri Sanjay Lal, Advocate for
respondents.
Heard.
The petitioner in this writ petition
has assailed the vires of Rule 3 of
Income Tax Rules, 1962.
It is not in dispute that the
aforesaid question of vires has been
decided by the Apex Court in the case of
Arun Kumar and others vs. Union of India
and others (2007) 1 SCC 732 . The Apex
Court has held thus :-
“92. We are, however, not inclined
to enter into larger question as in
our view, it is not necessary in
the light of statutory provision
relating to “concession in the
matter of rent respecting any
accommodation” in Section 17(2)(ii)
of the Act. We are of the view
2that Rule 3 would apply only to
those cases where “concession” has
been shown by an employer in favour
of an employee in the matter of
rent respecting accommodation.
Thus, whereas “charging provision”
is found in the Act of Parliament
(Section 17(2)(ii)), “machinery
component” is in the subordinate
legislation (Rule 3). The latter
will apply only after liability is
created under the former. Unless
the liability arises under Section
17(2)(ii) of the Act, Rule 3 has no
application and the method of
valuation for calculating
concessional benefits cannot be
resorted to.
99. For the foregoing reasons, we
hold that though Rule 3 of the
Rules cannot be held arbitrary,
discriminatory or ultra vires
Article 14 of the Constitution nor
inconsistent with the parent Act
(Section 17(2)(ii)), it is in the
nature of machinery provision and
applies only to the cases of
concession in the matter of rent
respecting any accommodation
provided by an employer to his
employees. Whether or not
Parliament could have in the
exercise of legislative power
created a “deeming fiction” as to
concession in the matter of rent in
certain circumstances (for which we
express no final opinion),no such
deeming provision is found in the
Act. It is, therefore, open to the
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assessee to contend that there is
no concession in the matter of
accommodation provided by the
employer to the employees and the
case is not covered by Section
17(2)(ii) of the Act.”
Question of vires has been settled by
the aforesaid decision.
Shri H.S.Shrivastava, Sr.Advocate
raised the submission that as apparent
from the amended Rule 3, the rule is not
applicable to any accommodation located in
“remote area” provided to an employee
working at a mining site or a project
execution site, etc.
This question has to be raised before
the appropriate Income Tax Authorities. We
cannot examine the facts, for the first
time, in the writ petition.
Shri Shrivastava, learned Sr.Advocate
has prayed for liberty to raise the
question before the Income Tax
Authorities.
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Petitioner is at liberty to do so.
Prayer has also not been opposed by Shri
S.Lal, Adv.appearing for respondents. In
view of aforesaid, petitioner would be
free to raise the aforesaid question
before the appropriate authority.
Writ petition stands disposed of in
terms of the aforesaid order.
(Arun Mishra) (S.C.Sinho)
Judge. Judge.
Jk.
