JUDGMENT
V. N. KHARE, C.J. :
This appeal is directed against the judgment of a learned single judge of this Court dt. 19th April, 1994. By the said judgment, the learned judge relying upon a decision of this Court in the case of Indian Bank Officers Association vs. Indian Bank (1994) 209 ITR 72 (Cal), disposed of the writ petition filed by the writ petitioner and the rule was made absolute in terms of prayers (a) and (b) of the writ petition.
2. The writ petitioner-respondent No. 1 is an association of officers of the Vijaya Bank – a Government of India undertaking. It was alleged that the writ application was filed by respondent No. 1 for and on behalf of and representing the association of officers of the respondent-bank. The respondent-bank is a nationalised bank and is governed by the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and in exercise of the powers conferred by s. 19 r/w. sub-s. (2) of s. 12 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the board of directors of the Vijaya Bank in consultation with the RBI and with the previous sanction of the Central Government made a regulation known as Vijaya Bank (Officers) Service Regulations. Regulation 25 of the said Regulations provides that no officer shall be entitled as of right to be provided with residential accommodation by the bank; it shall, however, be open to the bank to provide residential accommodation on payment by the officer of 6 per cent of the pay in the first stage of the scale of pay in which he is placed or the standard rent for the accommodation, whichever is less.
Admittedly, the bank has provided residential accommodation to certain officers of the bank and is charging standard rent. Sec. 15 of the IT Act provides for charging income-tax on the salaries of the employees. Sec. 17(1) of the said Act further provides that the salary includes perquisites. What is perquisite is defined in cl. (2) of s. 17 of the IT Act which is as follows :
“(2) perquisite includes :
(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.”
A plain reading of the aforesaid provision shows that if any accommodation is given to an employee of the bank as a rent-free accommodation, the same comes within the meaning of perquisite. Further, any accommodation given to an employee at the concessional rate of rent could also attract sub-cl. (ii) of cl. (2) of s. 17 of the Act meaning thereby that it will also be perquisite and chargeable to income-tax. In the year 1990, the respondent-bank issued a circular to all its branches informing them that in cases where the employees are paying standard rent for the accommodation provided by the bank, the same shall not be treated as accommodation given to them at a concessional rate. It was further clarified that such accommodation is not a perquisite and therefore is not chargeable to income-tax. This circular, however, was sought to be modified by another Circular dt. 14th October, 1992, by providing that the standard rent recovered by the bank in the case of accommodation provided to the employees, is not a fair rental value and as such it is a perquisite to be calculated as per r. 3(b) of the IT Rules, 1962.
The above circular gives rise to a writ petition under Art. 226 of the Constitution by the employees of the respondent-bank as stated above. The contention advanced on behalf of the writ petitioners was accepted by the learned trial judge and that is how the IT Departmental has come up in appeal before us.
3. The short question that arises for consideration is as to whether standard rent paid by the employees of the respondent-bank towards their accommodation allotted to them by the bank is a “perquisite” within the meaning of cl. (2) of s. 17 of the Act chargeable to income-tax. The provision in this respect has already been referred to hereinbefore which discloses that accommodation if given on concessional rate to the employee, is no doubt, a perquisite and to be included in salary chargeable to income-tax. For determining whether standard rent paid by the employees of the bank for the accommodation provided to them by the bank is a “concession”, one has to ascertain the meaning of the word “concession”. The word “concession” has not been defined either in the Act or in the Rules. The common dictionary meaning of the word “concession” is “the Act of yielding or conceding as to a demand or arguments; something conceded; usually implying a demand; claim or request; “a thing yielded”; “a grant”. In the Dictionary of English Law by Earl Jowitt, the meaning of “concession” is given as under :
“Concession, a grant by a central or local public authority to a private person or private persons for the utilisation or working of lands, an industry, a railway, waterworks, etc.”
We have also referred to regulation 25 which provides that the officers shall be required to pay standard rent where they are provided with the accommodation of the bank. Therefore, in this context, we have to see as to whether the accommodation provided to the employees on payment of standard rent is a “concession” within the meaning of sub-cl. (ii) of cl. (2) of s. 17 of the Act. The question of concession depends on the nature of accommodation provided to the employee, namely, the normal rent payable for such accommodation, provided to the employees, by other employees similarly situated and employed by the same employer and the actual rent paid by the assessee-employee concerned. It is not disputed before us that the rent paid by all the employees is of uniform rate and there is no departure of any kind in favour of any of the employees. In fact, the rent that is being paid by the employees has been fixed in accordance with the regulations and the employees similarly situated are paying the rent in accordance with the regulations. We, therefore, find that accommodation provided to the employees on payment of standard rent is not a concession as to be included within the meaning of perquisite. In the case of Officers Association, Bhilai Steel Plant vs. Union of India (1983) 139 ITR 937 (MP), it was held by the Division Bench of the Madhya Pradesh High Court that if the employee is paying standard rent for the accommodation in occupation, it cannot be said that he is receiving any concession in the matter of rent even though the rent paid by him is less than 10 per cent. of his salary. A learned single judge of this Court in the case of Indian Bank Officers Association vs. Indian Bank (supra) relied on this decision and accepted the contention of the writ petitioners that the accommodation provided to the employees of the bank on payment of standard rent is not a perquisite.
4. Learned counsel appearing for the IT Department then referred to cl. (b) of r. 3 of the IT Rules, 1962. On the strength of this provision he tried to build up the argument that since the employees are paying rent less than 10 per cent of their salaries, such accommodation provided to them on standard rent is a perquisite within the meaning of cl. (2) of s. 17 of the IT Act.
The above argument need not detain us any longer. A bare perusal of the rule referred to show that this is for the purpose of valuation of the perquisite provided to the employees and if there is no perquisite, the question of valuation does not arise. Rule 3(b) of the IT Rules can only be applied where the accommodation has been given to the employee at a concessional rate and if there is no concession, r. 3(b) of the rules is not applicable.
5. For the foregoing reasons, we do not find any merit in the appeal. The appeal, accordingly, is dismissed.
There will be no order as to costs.
BARIN GHOSE, J. :
I agree.
F.M.A. No. 38 of 1997 :
6. In view of the discussions made in the appeal (FMAT No. 2761 of 1994) decided today and the reasons given therein, this appeal is dismissed.
There will be no order as to costs.