National Thermal Power Cop. and Anors. vs Union of India and Anorrs. Supervisory Service Assoication N.T.P.C Vs Union of India and Others

Hon''ble Surendra Vikram Singh Rathore, J.—Case called. None present on behalf of the petitioners.

Heard Sri I.B. Singh Learned counsel for the opposite party no.2 and the learned Standing counsel for the State and perused the record.

By means of the above petitions the provisions of the Income Tax Act, whereby the income tax was to be paid on the house rent allowances, was under challenge. The petitioner had claimed refund of the tax already deducted on the basis of the difference of house rent recovery.

Learned counsel for the N.T.P.C. submits that the said provision of Section 17 of the Income Tax Act, were considered by the Hon''ble Apex Court in the case of Arun Kumar and others v. Union of India and others 2007 (1) S.C.C. 732. The same provision was under challenge in these writ petitions. While considering the aforesaid provision the Hon''ble Apex Court has held as under:

In several cases, the courts have invoked and applied the doctrine of "reading down" and upheld the constitutional validity of the Act. But it is equally well settled that if the provision of law is explicitly clear, language is unambiguous and interpretation leaves no room for more than one construction, it has to be read as it is. In that case, the provision of law has to be tested on the touchstone of the relevant provisions of law or of the Constitution and it is not open to a court to invoke the doctrine of "reading down" with a view to save the statute from declaring it ultra vires by carrying it to the point of "perverting the purposes of the statute".

It is further submitted that this Court, relying upon the pronouncement of the High Court of Andhra Pradesh had passed an interim order in these petitions which is as under:

"In view of above, it is provided that till the next date of listing, the respondents would not treat the difference between the House Rent recovered and 7.5% of salary as prequisite and deduct the tax thereon in respect of employees of National Thermal Power Corporation stationed at Unchahar, Raibareily."

It is submitted that the judgment of the Andhra Pradesh was challenged before the Hon''ble Apex Court in the aforementioned case of Arun Kumar and others Vs. Union of India and othrs (Supra) and appeal preferred against the order of the High Court was partly allowed and it was left open to the assessee to contend that there is no concession in the matter of accomodation provided by the employer to the employees and the case is not covered by Section 17 of the Act.

After judgment of the Hon''ble Apex Court in the case of Arun Kumar and others Vs. Union of India and others (supra) Section 17 of the Income Tax Act-1961 has been amended by the Finance Act 2007 w.e.f. 11th May, 2007 and it has prescribed deeming provision in case of residential accommodation provided by the employer (other than govt. to the employee u/s 17 (2) of the Income Tax Act. The effect of such amendment will be that the difference between prescribed percentage of salary and standard rent will be considered as deemed benefit and shall be chargeable to tax".

In view of the aforesaid fact situation, the writ petitions have become infructuous and are accordingly dismissed as infructuous.