Apex Court upholds Income Tax Rule 3 validity, dismisses challenges in Arunkumar case

The Apex Court upheld the constitutional validity of Rule 3 of the Income Tax Act in the case of Arunkumar and others Vs. Union of India. The petitions challenging the rule were dismissed, leading to the end of any interim orders. Employers must calculate and remit the tax liability equivalent to the TDS amount to the income tax department within three months. Failure to comply may result in being treated as assessees in default. The Income Tax Department is authorized to take further steps for assessment or reassessment, including recovery of tax dues, as per the law established in the Arunkumar case. All petitions were dismissed, and the rule was discharged with no costs awarded.

---

---

Issues involved: Challenge to the constitutional validity of Rule 3 of the Income Tax Act.

Summary:
The petitions challenged the constitutional validity of Rule 3 of the Income Tax Act, which was upheld by the Apex Court in the case of Arunkumar and others Vs. Union of India. The Apex Court held that Rule 3 will apply after proving a concession in rent without any deeming fiction. As the challenge has been addressed by the Apex Court, the cause of action for the petitioners does not survive, leading to the dismissal of all petitions.

With the dismissal of the petitions, any interim orders in place will automatically end. Employers are directed to quantify the tax liability equivalent to the TDS amount due to the income tax department and remit it within three months. Failure to comply may result in the employers being treated as assessees in default. The Income Tax Department is also permitted to take further steps for assessment or reassessment, including recovery of tax dues, in accordance with the law laid down by the Apex Court in the Arunkumar case.

In conclusion, all petitions are dismissed, and the rule is discharged with no order as to costs.

---