2022 (10) TMI 242 - SCH - Income Tax

Supreme Court clarifies petitioner status under Income Tax Rules

Indian Institute of Science Versus Dy. Commissioner of Income Tax

Indian Institute of Science Versus Dy. Commissioner of Income Tax - [2022] 446 ITR 418 (SC) Issues:Interpretation of Article 12 of the Constitution of India for defining State instrumentality; Applicability of Central/State Government rules on perquisites under Section 17(2) of the Income Tax Act; Permission to file a review application on certain aspects of the case.Interpretation of Article 12 of the Constitution of India:The Supreme Court examined whether the petitioner could be considered a State instrumentality within the definition of Article 12 of the Constitution of India. The High Court's finding that the petitioner, even if falling under Article 12, cannot be equated with Central/State Government employees under Rule 3 of the Income Tax Rules, 1962 was upheld. The Court emphasized that adopting Central Government Rules or pay-scales does not automatically categorize the petitioner as a Central/State Government entity. The judgment affirmed that no interference by the Court was necessary on this issue.Applicability of Central/State Government rules on perquisites under Section 17(2) of the Income Tax Act:Regarding the computation of perquisites under Section 17(2) of the Income Tax Act, the Court agreed with the High Court's ruling that the rules applicable to government employees would be relevant. The petitioner's contention that crucial aspects were not adequately considered on merits was acknowledged. The Court allowed the petitioner to file a review application before the High Court to address these aspects. However, the Court clarified that the review application should focus solely on the identified aspects and not challenge the conclusion regarding the petitioner's classification concerning Central/State Government employees for Section 17 purposes.Permission to file a review application on certain aspects of the case:The Supreme Court granted permission to the petitioner to file a review application specifically addressing the crucial aspects that were allegedly not fully considered by the High Court. The Court emphasized that any review filed should adhere to legal procedures and be evaluated on its own merits. Notably, the Court prohibited the petitioner from challenging the aspect already determined concerning the petitioner's equivalence with Central/State Government employees for Section 17 purposes. Consequently, the Special Leave Petitions were dismissed/disposed of by the Court.This detailed analysis of the Supreme Court judgment highlights the key issues addressed, the Court's findings, and the permissions granted to the petitioner for further legal action within the specified parameters.