Kayamkulam NTPC Employees Union vs NTPC Ltd. and Another

C.N. Ramachandran Nair, J.—Appellant in the writ appeal and the petitioner in the writ petition are employees unions which have approached this Court for a direction to the employer not to deduct tax on the value of perquisites in respect of accommodation provided at concessional rate of rent to the employees. The learned Single Judge, who decided the writ petition against which the writ appeal is filed, felt that the matter should be considered by the IT authorities and not by this Court in writ proceedings. On considering the grounds raised in the writ appeal and in the writ petition (civil), we do not find any justification to take a different view because tax has to be deducted at source on the salary payments including perquisites as required under s. 192 of the IT Act. If the deduction proposed is excess, it is always open to the employees to approach the AO to issue a certificate under s. 197 for payment without deduction or deduction after excluding any amount which is not taxable, and if such application is filed, it is for the AO to consider and pass orders, which will bind on the employer deducting tax. The issue raised is apparently covered by a decision of the Supreme Court in Arun Kumar and Others Vs. Union of India (UOI) and Others, where the Supreme Court has considered validity of the amendment to the IT Rules, i.e. on valuation of perquisites pertaining to rent free accommodation, accommodation at concessional rent etc. provided by the employer.

Accordingly, we dispose of both the writ appeal and the writ petition leaving it open to the employees concerned or the union in a representative capacity to approach the AO for issuing orders under s. 197 of the IT Act after considering the case on merits. We make it clear that since stay was granted by this Court, the AO will be free to demand tax without reference to period of limitation if it is otherwise payable either from the employers under s. 201(1) or from the employee-assessees, by making assessments against them.

Both the writ appeal and the writ petition are disposed of as above.