(Per: HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. The sole relief claimed by the petitioner, Gujarat State Cooperative Agriculture & Rural Development Bank Employees' Union in this petition under Article 226 of the Constitution of India, is to declare rule 3 of the Income Tax Rules, 1962 substituted by the Income Tax (22nd Amendment) Rules, 2001, as ultra vires, unconstitutional and void.
2. It is the case of the petitioner that the value of benefit resulting from concessional rate loan granted by the third respondent to its employees who suffered loss of either movable or immovable property on account of earthquake that occurred on 26th January, 2001 and the value of benefit resulting from vehicle loan, at concessional rate is not an income chargeable under the head “perquisites” as defined under section 17(2) of the Income Tax Act, 1961. Accordingly, rule 3 of the Income Tax Rules, which, inter alia, provides that the value of the benefit to the assessee resulting from the provision of interest-free or concessional loan made available to the employee or any member of his household during the relevant previous year by the employer or any person on his behalf shall be determined as the sum equal to the simple interest computed at the rate of 10% per annum in respect of loans for house and conveyance and at the rate of 13% per annum for other loans on the maximum outstanding monthly balance as reduced by the interest, if any, actually paid by him or any such member of his household, amounts to excessive delegation and usurpation of essential legislative function.
3. Mr. M. R. Bhatt, Senior Advocate, learned counsel for the respondent submitted that the present petition only seeks a declaratory relief to the effect that rule 3 of the Income Tax Rules, 1962 as substituted by the Income Tax (22nd Amendment) Rules, 2001 be declared as ultra vires, unconstitutional and void, and that no substantive relief has been claimed in the petition, and as such, the petition itself is not maintainable. It was further submitted that the controversy involved in the present case is no longer res integra inasmuch as, the same stands concluded by the decision of the Supreme Court in the case of Arun Kumar and others v. Union of India and others, (2006) 286 ITR 89 (SC), wherein the constitutional validity of rule 3 of the Income Tax Rules, 1962 as amended by notification dated 25th September, 2001 has been upheld.
4. As noted earlier, the sole relief claimed by the petitioner is for a declaration that rule 3 of the Income Tax Rules, 1962 as amended by notification dated 25th September, 2001 issued by the second respondent – Central Board of Direct Taxes in exercise of powers under section 295 read with clause (2) of section 17 and sub-section (2C) of section 192 of the Act, is ultra vires and unconstitutional. Apart from the fact that the constitutional validity of a statutory provision cannot be challenged in isolation without seeking any consequential relief, in the case of Arun Kumar and others v. Union of India and others, (supra), wherein the Supreme Court, was, inter alia, called upon to decide the constitutional validity of rule 3 of the Income Tax Rules, 1962 as amended by notification dated 25th September, 2001, the constitutional validity of the said rule has been upheld. The controversy involved in the present case, therefore, stands concluded by the said decision against the petitioner. Consequently, the challenge to the constitutional validity of rule 3 of the Rules in the present petition also fails.
5. For the reasons stated above, the petition fails and is, accordingly, dismissed. Rule is discharged with no order as to costs.
[AKIL KURESHI, J.] [HARSHA DEVANI, J.] parmar*