Court upheld the constitutionality of income tax provisions regarding fringe benefits, finding them valid and non-discriminatory.

1. The Staff Unions and Officers' Associations of various banks have come up with these writ petitions, challenging either S.17(2)(iii) or 17(2) (vi) or R.3(7)(i) of the Income Tax Rules or both.

2. We have heard M/s. Srinath Sridevan, Jayesh B. Dolia and N. G. R. Prasad, learned counsel appearing for the writ petitioners, Mr. T. Pramod Kumar Chopda and Mr. J. Narayanasamy, learned Standing Counsel for the Income Tax Department and the learned counsel appearing for the banks.

3. Chapter IV of the Income Tax Act, 1961 contains various provisions from S.14 to 59, indicating the method of computation, of total income under various heads such as salaries, income from house property, profits and gains of business or profession, capital gains and income from other sources.

4. S.15 indicates the items that are chargeable to income tax under the head "salaries". The deductions that could be allowed from the income chargeable under the head "salaries" are indicated in S.16.

5. Sub-Section (1) of S.17 contains a list of items that would be included within the salary, the list of items that would be included as perquisite and the list of items that would be included as profits in lieu of salary. The items includible under the head salary are indicated in Sub- Section (1), the items includible as perquisite are indicated in Sub-Section (2) and the items includible as "profits in lieu of salary" are indicated in Sub- Section (3).

6. Prior to 1.4.2010, Sub-Section (2) of S.17 contained only 6 items that were included as perquisites. Those 6 items, in simple terms, could be stated as follows:
(i) the value of rent free accommodation provided by the employer of the assessee;
(ii) the value of any concession in the matter of rent respecting any accommodation provided by the employer;
(iii) the value of any benefit or amenity granted or provided free of cost or at concessional rate in cases indicated in the Section;
(iv) any sum provided by the employer in respect of any obligation, which, but for such payment, would have been payable by the assessee;
(v) any sum payable by the employer whether directly or through a fund other than a recognized provident fund or accrued superannuation fund etc., and
(vi) the value of any other fringe benefit or amenity (excluding the fringe benefits chargeable to tax under Chapter XII - H) as may be prescribed.

7. But, by the amendment under Finance (No.2) Act, 2009, three items under Clauses (vi), (vii) and (viii) were substituted for the existing Clause (vi). In other words, after the amendment with effect from 1.4.2010, there are eight items included as perquisites under Sub-Section (2) of S.17.

8. What was Clause (vi) before 1.4.2010 actually became Clause (viii) after 1.4.2010, with a slight modification. After 1.4.2010, Clause (viii) of Sub- Section (2) of S.17 reads as follows:
"(viii) the value of any other fringe benefit or amenity as may be prescribed."
The only difference between S.17(2)(vi) as it stood before 1.4.2010 and S.17(2)(viii) as it stands after 1.4.2010 is the absence of a reference to the fringe benefits chargeable to tax under Chapter XII - H found within brackets in S.17(2)(vi) before its amendment. Otherwise, what was S.17(2)(vi) before 1.4.2010 has actually become S.17(2)(viii) after 1.4.2010, without the words that appeared in brackets.

9. Interestingly, many of the writ petitioners did not even notice the amendment that S.17(2) had undergone, under Finance (No.2) Act, 2009 and hence, the prayer made by some of them in their writ petitions, is to