TaxTMI 
TaxTMI 
2006 (3) TMI 79
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....-India level as well as A.P. circle. They seek a declaration by this writ petition that there was no liability on the first respondent to deduct tax at source in terms of section 192 of the Income-tax Act, 1961 (for short "the Act") in the matter of rent respecting any accommodation provided by the second respondent to the members of the petitioner associations. They also seek a writ of prohibition restraining the first respondent from enforcing the provisions of section 192 of the Act against the petitioners with regard to a "non-existing perquisite" and also restraining respondents Nos. 3 and 4 from treating the first respondent as an assessee in default. It is not disputed that the salaries of the members of the petitioner associations are subject to tax in terms of section 192 of the Act. 10 to 15 per cent, of the members of the petitioner associations have been allotted quarters originally as Government servants and presently they continue to hold as employees of the second respondent. These quarters are allotted as per pay scales and types of quarters as categorized by CPWD norms under the Ministry of Housing and Urban Development, Government of India. Some officials of th....
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....ed by the second respondent to the members of the petitioner associations. It is the case of the petitioners that what was not a perquisite as long as the members of the petitioner associations remained Government servants, has become a perquisite in the eyes of the DDOs by virtue of the clarification letter and note. These clarifications, according to the petitioner associations, are contradictory to the law declared by this court in Steel Executives Association v. Rashtriya Ispat Nigam Ltd. [2000] 241 ITR 20. Therefore, they seek quashing of the clarification letter and also the note and further seek a direction that the tax should not be deducted for the perquisite as is being done now. Counters have been filed by the respondents. In the counter filed by the third respondent it is stated that the writ petition needs to be dismissed on the ground that the rules, as they existed when Steel Executives Association v. Rashtriya Ispat Nigam Ltd. [2000] 241 ITR 20 (AP) was decided, have been amended and according to the respondent, under section 192 of the Income-tax Act a person responsible for paying any income chargeable under the head "Salaries" is bound to deduct income-tax at ....
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....f such furniture is hired from a third party, the actual hire charges payable therefor ; ... (b) The value of residential accommodation provided at a concessional rent shall be determined as the sum by which the value computed in accordance with clause (a), as if the accommodation were provided free of rent, exceeds the rent actually payable by the assessee for the period of his occupation during the relevant previous year." The amended rule 3 of the Income-tax Rules reads as under: "3. For the purpose of computing the income chargeable under the head 'Salaries', the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:- (1) The value of residential accommodation provided by the employer during the previous year shall be determined on the basis provided in the Table below: ------------------------------------------------------------ Sl. Circumstances Where accommodation Where accommodation No &nbs....
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....nbsp; serving with plant or equipment) any body or or if such undertaking furniture is hired under the from a third party, control of such the actual hire Government on charges payable &....
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....p; population column (3) and employer and-(a) exceeding 4 lakhs increased by 10 per where the as per 2001 census; cent. per annum of accommodation (ii) 15 per cent. the cost of is owned by of salary in other furniture the employer, or cities,in respect (including of the period television sets, during which the radio sets, said accommodation refrigerators, &nb....
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....sp; charges payable for the same as reduced by any charges paid or payable for the &nbs....
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.... radio sets, employee. refrigerators, other household appliances, air-conditioning  ....
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....; reduced by any charges paid or payable for the same by the &nbs....