- (1.) These special leave petitions are directed against the order dt. 15th March, 2010 in Writ Petri. No. 155 of 1996 and the order dt. 26th July, 2010 in Notice of Motion No. 364 of 2010 in Review Petn. (L) No. 43 of 2010, passed by the Division Bench of the High Court of Bombay. The facts briefly are that Rule 3 of the IT Rules, 1962 was amended by the IT (Twenty-Second Amendment) Rules, 2001 and by the amendment, the method of fixation of the value of 'perquisites' under Section 17(2) of the IT Act, 1961 (for short 'the Act') was also amended. The Association of Scientific & Technical Officers of the Oil & Natural Gas Corporation Limited (for short 'the ONGC) filed Writ Petn. No. 155 of 1996 before the High Court, challenging the vires of the aforesaid method of valuation of perquisites incorporated in the amended Rule 3 of the IT Rules. The High Court, while entertaining the writ petition, granted the interim prayer in terms of the prayer 14(e) of the writ petition.
(2.) As a result, the ONGC could not deduct tax on the value of the perquisites mentioned in Section 17(2)(ii) of the Act. To make it more clear, 10 per cent of the salary of employees of the ONGC in cities having population exceeding four lakhs as per 1991 census was not included in the 'salary' by the employees for the purpose of computing the tax that is deductible from the income of the employees for making payment to the IT Department.
(3.) While the writ petition was pending before the High Court, this Court in Arun Kumar v. Union of India, 2007 1 SCC 732, upheld the vires of the amended Rule 3 of the Rules and declared the method of valuation of perquisites provided in the amended Rule 3 as valid. When, therefore, the High Court took up the hearing of the writ petition on 15th March, 2010 it dismissed the same by the impugned order and observed that the interim order passed in the writ petition shall automatically come to an end and the ONGC shall be liable to quantify the tax liability equivalent to the amount of TDS (tax deducted at source) which was deductible and payable to the IT Department within three months from the date of receipt of the impugned order and in the event of compliance of this direction of the High Court, none of the employers shall be treated as an Assessee in default. The ONGC, thereafter, filed Review Petn. (L) No. 43 of 2010 before the High Court, but by the impugned order dt. 26th July. 2010, the High Court dismissed the review petition.;