Kayamkulam NTPC Employees Union vs NTPC Ltd.

K. Balakrishnan Nair, J.—The petitioner is a registered trade union of the workmen of the 1st respondent National Thermal Power Corporation Limited, now known as NTPC Limited. The members of the petitioner are provided with residential quarters by their employer in a village near Kayamkulam town. The petitioner submits, its members are paying rent to the 1st respondent at market rate and no concession in the matter of rent, is given to them. But, while the 1st respondent employer is deducting tax at source u/s 197 of the Income Tax Act, the alleged concession given to them in the matter of payment of rent, is also reckoned along with the income. The same is done, relying on Ext.P1 amendment to the Rules. It is also pointed out that while tax is deducted at source, from the officers, the concession granted to them in the matter of rent while providing accommodation, is not being taken into account. So, this writ petition is filed by the petitioner, seeking the following reliefs:

(i) to issue a writ of certiorari to quash notification insofar as it provides for computation of perquisite accommodation to the disadvantage of the petitioner and to restore position prior to Ext.P1 amendment.

(ii) to issue direction or order not to include the perquisite value of accommodation as computed in accordance with Ext.P1 notification for the purpose of deduction at source from the salary of petitioner''s union members;

(iii) to direct the first respondent-Corporation (NTPC Ltd.) to treat employees covered by Ext.P5(a) and P5(b) equally and resort to tax deducted at source without discrimination between Workmen and Executives.

At the time of hearing, the learned counsel for the petitioner submitted that it does not challenge Ext.P1, as such. It was contended that in fact, Ext. P1 is supporting its case. Ext.P1 is an amendment to the Income Tax Rules, 1962. Rule 3 thereof has been substituted by rule contained in Ext. P1. It provides for valuation of perquisites. Where accommodation is provided by an employer, other than the State/Central Government, the rule provides that if the place of accommodation is owned by the employer, 10 per cent of the salary in cities, having a population exceeding 4 lakhs as per the 1991 census and 7.5 per cent of the salary in other cities, shall be treated as the value of the perquisites. The rule further provides that where the accommodation is taken on lease or rent by the employer, the actual amount of lease rent paid or payable by the employer or 10 per cent of the salary, whichever is lower, as reduced by the rent, if any, actually paid by the employee will be treated as the value of the perquisites. The petitioner submits, going by Clause 2(a) of Table-I of the said Rules, the perquisites in the matter of providing accommodation, need be valued, if only the same is provided in cities. Cities are divided into two types, based on population. In places other than cities, it is submitted that concession in the matter of rent is exempted while valuation of perquisites is made with effect from the date of introduction of Ext.P1 rules. The petitioner also submits that the Officers are exempted from the liability to pay tax in relation to the perquisites of residential accommodation provided by the employer, at the time of tax deduction. Only the workmen are discriminated and they are being harassed, it is submitted. On the above grounds, the petitioner prays for granting the abovequoted reliefs.

Heard the learned Central Government Standing counsel appering for the 2nd respondent also. He submits that the method of valuation provided under rule 3 does not relieve the petitioner from the liability u/s 17(2)(ii) of the Income Tax Act. Even assuming rule 3, concerning valuation of perquisites, does not apply to the concessions granted in areas other than cities, still, the assessing officer is competent to assess the value of the perquisites, by virtue of the substantive provision in the Act. It is also pointed out by him that when Clause 2(a) is read with Clause 2(b) of Table-I of Ext. P1, the reference in Sub-clause (ii) of Clause 2(a) of Table-I to other cities, should be read as to other places. This submission is made, relying on the fact that Clause 2(b) of Table-I does not refer to any city or village. Therefore, 7.5 per cent of the salary shall be reckoned as the value of the perquisites regarding residential accommodation in all places, except in cities with a population of more than four lakhs, it is submitted. The learned counsel further points out that as long as the members of the petitioner do not get certificates from the assessing officer u/s 197 of the Act, the employer is bound to deduct the tax at source, according to its judgment. If the petitioner is aggrieved by such deduction, its members have to work out their remedies under the provisions of the Act, by filing returns and claiming refund, it is pointed out.

The contention of the petitioner regarding discrimination, cannot be upheld. If tax is deductible from the perquisites enjoyed by the workmen, they cannot resist it, saying that tax is not deducted from the Officers. The grievance of the petitioner that the employer is. deducting tax unauthorisedly and without the authority of law, need not be adjudicated in this writ petition. The petitioner''s members have got a right to move the assessing officer u/s 197 of the Income Tax Act for issuing a certificate, concerning the liability of the workmen for deduction of tax at source in relation to the perquisites of housing accommodation provided by their employer.

Going by the contentions advanced by both sides regarding the interpretation of the Table under rule 3, I feel that the view taken by the respondents, is a plausible view. It cannot be said to be manifestly wrong or perverse. But, I am not finally adjudicating on that point, as the same is likely to prejudice the members of the petitioner when they move the statutory authority for appropriate reliefs. The challenge of the petitioner against Ext. P1 was not pressed at the time of hearing and, therefore, it has not been considered. The other reliefs prayed for by the petitioner also cannot be granted in this writ petition for the reasons mentioned above. Accordingly, the writ petition is dismissed subject to the right of the members of the petitioner to move the assessing officer u/s 197 of the Income Tax Act for appropriate reliefs.