Uniform standard rent is not a taxable perquisite unless a concession is shown in employee accommodation charges.

Standard rent charged by an employer for employee accommodation did not, by itself, establish a taxable perquisite under salary taxation because a concession in rent must first be shown in fact; uniform standard rent for similarly placed employees was not enough. On that basis, the employer could not be compelled to deduct tax at source on an assumed perquisite value. The writ petitions were maintainable at the instance of the trade union and affected employees because the dispute involved an allegedly unlawful and discriminatory deduction from salary, and collective litigation avoided multiple individual proceedings.

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Issues: (i) whether standard rent charged by an employer for accommodation provided to employees could be treated as a perquisite or a concessional rent for the purpose of salary income and tax deduction at source; (ii) whether the employer could be compelled to deduct tax at source on that basis; (iii) whether the employees' trade union could maintain the writ petitions.

Issue (i): whether standard rent charged by an employer for accommodation provided to employees could be treated as a perquisite or a concessional rent for the purpose of salary income and tax deduction at source.

Analysis: Salary is taxable under section 15, and section 17(2)(ii) includes the value of a concession in rent as a perquisite. Rule 3 values rent-free or concessional accommodation, but the existence of a perquisite depends first on proof that the rent charged is actually concessional. Where all employees are charged the same standard rent for the same type of accommodation, no individual employee is shown to have received a concession merely because the rent is below 10 per cent of salary. The standard-rent method rationalised the charge and did not itself establish a taxable concession.

Conclusion: The charge of standard rent did not create a taxable perquisite or concessional rent against the employees.

Issue (ii): whether the employer could be compelled to deduct tax at source on that basis.

Analysis: Tax deduction at source cannot be enforced on an amount that is not lawfully taxable as a perquisite. The Department's attempt to coerce deduction on the assumption of a concession was unwarranted, especially when individual assessments had already taken the view that no perquisite existed. The writ court also noted the unfair and discriminatory treatment of similarly placed employees in different locations.

Conclusion: The employer could not be compelled to deduct tax at source on the supposed perquisite value of the standard rent.

Issue (iii): whether the employees' trade union could maintain the writ petitions.

Analysis: The objection that the union could not espouse the employees' income-tax grievance was rejected. The dispute concerned an unlawful and discriminatory deduction from salary affecting service conditions, and the union's intervention avoided multiplicity of individual litigation.

Conclusion: The writ petitions were maintainable at the instance of the trade union and affected employees.

Final Conclusion: The Court held that standard rent charged for employer-provided accommodation could not be treated as a concession for tax deduction purposes and issued a mandamus restraining such deductions.

Ratio Decidendi: A taxable perquisite arises only when a real concession in rent is shown; charging uniform standard rent for employer-provided accommodation does not, by itself, amount to a concessional benefit under salary taxation.

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