2003 (4) TMI 10

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....erned by that amended rule to compute the value of perquisites under the old rule for the period from April 1, 2001, to September 30, 2001. The petitioners are mainly unions or associations comprising of employees who are in public sector undertakings. In their perception the amendment effected to rule 3 has resulted in their being deprived of recognition of their distinct status, distinct in contrast to the employees of the Government and of the private sector, and further their being burdened with additional liability to tax. The amended rule in their view is violative of article 14. Rule 3 of the Income-tax Rules, 1962, deals with the valuation of perquisites. Before proceeding further, we may record here that in the counter affidavit....

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....salaries have always been taxable before and after the amendment to rule 3. Only the mode of valuation of some of the perquisites has undergone change after the amendment. The Income-tax Act itself does not set out the manner in which the perquisites are to be valued. That is dealt with by the rule making authority, namely, the Central Board of Direct Taxes, subject to the control of the Central Government. The Board may, by virtue of power conferred on it by section 295(1), by a notification in the Gazette of India, make rules for the whole or part of India for carrying out the purposes of the Act. Section 295(2)(c) specifically refers to perquisites. "295. (2) In particular and without prejudice to the generality of the foregoing po....

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.... the service of Government and other employees. The elimination of public sector employees as a separate class does not in any way offend article 14. Salaried employees who are not in the service of the Government form a class, all of whom have the common characteristic of not being employed under the Government, while those in Government service form a distinct class of being employees of the Government, whether, State or Central, whose salaries and other conditions of service are distinct, when compared to those who are not in Government service. It has been held by the Supreme Court in more than one case that the State has a wide discretion with regard to persons or objects to be taxed, the point of levy as also the quantum thereof. T....

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....s a matter of discretion of the rule-making authority and so long as the discretion is not shown to be whimsical or grossly arbitrary the choice made by that authority is to be accepted. The grievance of the petitioners with regard to the rate of interest fixed in rule 3 for the purpose of computing the value of perquisites by way of interest-free loan or loans at a concessional rates of interest, for acquiring houses and for conveyance at 10 per cent., and at 13 per cent., for other loans reduced by the interest, if any, actually paid by the employees, also cannot be said to be so arbitrary as to warrant interference. It is always open to the employees not to avail of the loan from the employer, if the employees are of the view that the....