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High Court Of Calcutta
Barin Ghosh,
COAL MINES OFFICERS ASSOCIATION OF INDIA - Appellant
Versus
UNION OF INDIA - Respondent
Writ Petn. 2263 Of 2003
Decided On : 09/12/2003
RENT CONCESSION - INTERPRETATION OF SECTION 17(2)(II) OF THE INCOME TAX ACT, 1961 - MEANING OF 'RENT' - WHETHER NORMAL RENT, STANDARD RENT OR FAIR RENT - CLASSIFICATION BETWEEN PURE GOVERNMENT EMPLOYEES AND EMPLOYEES OF GOVERNMENT COMPANIES AND COMPANIES OWNED BY SUCH COMPANIES - WHETHER JUSTIFIED.
Fact of the Case:
The petitioners, employees of various companies fully owned by the Central or State Government or companies owned by such companies, challenged the method of determining the value of concession in the matter of rent under Section 17(2)(ii) of the Income Tax Act, 1961 (the Act). They contended that the term 'rent' in the provision should be interpreted as normal rent, standard rent, or fair rent, and that the classification between pure Government employees and employees of Government companies and companies owned by such companies was discriminatory.
Finding of the Court:
The Court held that the term 'rent' in Section 17(2)(ii) of the Act should be interpreted in its ordinary sense, meaning charges for using unfurnished accommodations provided by the employer to its employees. The Court further held that the classification between pure Government employees and employees of Government companies and companies owned by such companies was justified on the basis of the different nature of their employment and job responsibilities.
Issues: 1. Whether the term 'rent' in Section 17(2)(ii) of the Act should be interpreted as normal rent, standard rent, or fair rent? 2. Whether the classification between pure Government employees and employees of Government companies and companies owned by such companies was discriminatory.
Ratio Decidendi: 1. The term 'rent' in Section 17(2)(ii) of the Act should be interpreted in its ordinary sense, meaning charges for using unfurnished accommodations provided by the employer to its employees. The Court rejected the petitioners' contention that the term should be interpreted as normal rent, standard rent, or fair rent, as there was no justification for reading such a meaning into the provision. 2. The classification between pure Government employees and employees of Government companies and companies owned by such companies was justified on the basis of the different nature of their employment and job responsibilities. The Court noted that Government employees have different entry into service, purpose of entry, job responsibility, and performance compared to employees of Government companies and companies owned by such companies.
Final Decision: The Court dismissed the petitions, holding that the method of determining the value of concession in the matter of rent under Section 17(2)(ii) of the Act was valid and that the classification between pure Government employees and employees of Government companies and companies owned by such companies was justified.
( 1 ) THE principal reason to support the claims of the petitioners in this group of writ petitions is based on the pronouncement of a Division Bench of the Madhya Pradesh High Court in Officers' Association, Bhilai Steel Plant v. Union of India and Ors. (1983) 139 ITR 937 (MP), which was followed by a learned Single Judge of this Court in Indian Bank Officers' Association and Ors. v. Indian Bank and Ors. , and then by a Division Bench of this Court, to which I was a party, in ITO and. Ors. v. All India Vijaya Bank Officers' Association and Ors. , and lastly by the Division Bench of the Andhra Pradesh High Court in Steel Executives' Association v. Rashtriya Ispat Nigam Ltd.
( 2 ) DR. Pal, who argued the case of one of the petitioners, submitted that similar questions are now being considered by the Supreme Court in a proceeding now pending before it, which has arisen out of a judgment delivered by a Division Bench of Jharkhand High Court and where his clients have filed an application for transfer of the case of his clients, which is also now been considered by me along with other matters. Despite knowledge of the fact that the Supreme Court is considering similar questions, I have decided to deal with the matter for it appeared to me, upon perusing the judgment of the Division Bench of Jharkhand High Court, that the issues raised by the petitioners before me were not dealt with by the Jharkhand High Court. The purpose of delivering this judgment was to get what the petitioners and the respondents wanted to submit and to analyse the same in order to help reaching a right conclusion and, accordingly, I have assured Dr. Pal that even if, I am not with him, I would stay the operation of the present judgment until such time the Supreme Court decides the Transfer Application made by Dr. Pal's clients.
( 3 ) IN simple terms, the issue before me is what is the meaning of concession in the matter of rent as provided for in Clause (ii) of Sub-section (2) of Section 17 of the IT Act, 1961 (hereinafter referred to as "the Act" ). Section 17 (2), Sub-clause (i) and Sub-clause (ii) of the Act are 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;"
( 4 ) THE petitioners before me, on whose behalf Dr. Pal and Mr. Poddar have argued and assisted me to the hilt as well as other petitioners, have not been provided with any rent-free accommodation by their respective employers. All of them have been provided accommodation by their respective employers but they have been made to pay certain rent in relation thereto. There is no dispute that all such employers are companies fully owned by the Central Government or State Government or companies owned by such companies. It was submitted by Dr. Pal on the basis of the pleadings filed by his clients that such rent had been fixed by the employer on the basis of the principle of fixing rent as adopted by the Central Government while fixing rent of accommodations provided by the Central Government to its own employees. Mr. Poddar has drawn my attention to the fact that insofar as his clients are concerned, their rents have been fixed on the basis of a direction of their employer based on the recommendations of Fourth Pay Commission. He has submitted that the principle adopted in the matter of fixation of rent of the accommodations provided to his clients is in no way dissimilar to those adopted by the Central Government. The learned counsel for the petitioners has submitted that unless there is a concession in the matter of rent, it would not be a perquisite. They submitted that in order to ascertain whether there was any concession, one has to determine what was the rent. Once it is found that the rent is 'x', only then it can be ascertained whether there is any concession in the matter of
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