BALIA, J. - (1.) THESE two writ petitions are by the respective Staff Associations of M/s Aditya Cement and M/s Birla White Cement Plants which are two separate and independent Units of Grasim Industries Limited. The issue raised and the reliefs claimed in both these writ petitions are identical and hence, they were heard together and are being decided by a common order.
(2.) THE reliefs claimed in both the writ petitions are identical and as under:- (i) THE Notification No. SO 940 (E) dated 25. 9. 2001 reported in 251 ITR (ST.) 81 (Annexure/1) be quashed as violative of Articles 14, 300a, 301 and 304 of the Constitution of India; (ii) Section 17 (2) (vi) as Parliament has deleged without authority of law and without any guideline, to select the items of perquisites and the valuation thereof to the Executive and the Rule-framing Authority be quashed and declared ultra vires the Constitution. (iii) THE assessing authorities constituted under the Income Tax Act to permanently refrain from enforcement of the Notification No. SO 940 (E) dated 25. 9. 2001. (iv) Any other appropriate order or direction which this Hon'ble Court deems just and proper may kindly be issued. From the perusal of the above reliefs claimed by the petitioners in the context of impugned Notification dated 25. 9. 2001, it is apparent that these reliefs relate to computation of taxable income of the members of the respective petitioners Associations who are in employment with M/s Aditya Cement and M/s Birla White Cement respectively under the Head `income From Salaries', which is to be computed in accordance with the provisions of the Income Tax act, 1961 (for short `the Act' ). More particularly, the contentions relate to valuation of the perquisites, which from part of salaries, according to the Rules framed for that purpose. CONTENTIONS: The grievance of the petitioners is with reference to the insertion of clause (vi) in Sec. 17 (2) with effect from 1. 4. 2002 by the Finance Act, 2001 and amendment in Rule 3 of the Income Tax Rules, 1962 vide Notification dated 25. 9. 2001, which has been brought into force with effect from 1. 4. 2001. The insertion of clause (vi) in Sec. 17 (2) of the Act has been challenged on the ground of excessive delegation of the legislative authority of the Parliament. It is contended by the learned counsel for the petitioners that by allowing the rule Making Authority to prescribe `any other fringe benefit or amenity' to be included in the perquisites and to provide for its value to be included in Total Taxable Income of the assessee is without any guidelines. It has been left to the Rule making Authority to select the items of `fringe benefits' and `amenities' and prescribe method and mode of valuation thereof, which amounts to abdication of essential legislative function of parliament to subordinate legislation. The amendment in the Rules of 1962 vide Notification dated 25. 9. 2001 has been assailed on two fold grounds. Firstly that such an amendment has been brought to give effect to insertion of clause (vi) in Sec. 17 (2) of the Act. Clause (vi) itself has been inserted in Sec. 17 (2) of the Act vide Finance Act, 2001 with effect from 1. 4. 2002 only. Framing of the impugned Rules to be operative with effect from 1. 4. 2001 results in giving effect to the substantive provisions with effect from 1. 4. 2001 when the substantive provision itself is to come into force with effect from 1. 4. 2002. It shows total lack of application of mind by the Rules Framing Authority to the task which has been entrusted to it. Secondly, the basis of computation of income to be taxed for the assessment year 2001-2002 which is earned in previous year relevant assessment year 2001-2002 i. e. financial year ending on 31. 3. 2002, cannot be altered retrospectively as ex-hypothesis, the tax on such income stands determined on close of the previous year in which the income of the assessee is earned as per the law prevalent at the time when taxing event took place. Learned counsel contends that law as it stands on 1st of April, 2001, at the commencement of the assessment year 2001-2002m, which reference to which income is to be assessed, is applicable, for computing taxable income of any assessee for the assessment year 2001-2002. The basis of computing the value of perquisites, while computing the total taxable income for the assessment year 2001- 02 has been altered by giving effect to the amended Rules retrospectively, according to the learned counsel, is not only contrary to law relating to assessment of income for any particular assessment year, but results in violation of Art. 14 of the Constitution as it is unreasonable and also discriminatory.
(3.) IN this connection, it has been urged that in the application of rules, the two persons who are not similarly situated are treated at par and two persons who are similarly situated may not be treated at par which results in violation of Art. 14 substantively. For example Rule (3) provides strait- jacket formula of valuing perquisite relating to rent free house accommodation provided by an employer at fixed percentage of salary without reference to geographical situation of accommodation results in two wholly differently valued house accommodation to be valued at par, so conversely when two employee drawing different pay are allotted free accommodation of same size quality and at same site, lends themselves paying different tax, because value of same perquisite being determined at different level depending upon level of salary. It is urged value of like perquisite for two persons cannot be different but this difference takes place due to Rule (3) as substituted vide amendment in question. On the other hand, the learned counsel appearing for the Revenue has urged that amendments brought into the Act as well as the Rules are valid. By insertion of clause (vi) in Sec. 17 (2) of the Act, no new liability has been imposed. It has only been clarified that fringe benefits or amenities which from part of perquisites, their value as may be prescribed by Rules for being included in the computation of total income of the assessee under the Head of `salaries. ' He contended that the Rules can be framed retrospectively as the rules Making Authority has been conferred with specific powers to frame the rules retrospectively by parent legislation. The contention of the learned counsel for the Revenue is that in fact the question of retrospectivity about applicability of Rules, which has been brought into force with effect from 1. 4. 2001 really does not arise and does no affect the members of the petitioners Associations in any manner. It has been left at the option of the tax-payers to be governed by the unamended Rules for the period upto the date of Notification for the assessment year 2001-2002 or by the amended Rules. Therefore, it is for the assessee to choose such method of valuation of perquisites for the assessment year 2001-2002, which appears to him more beneficial. It was also urged by the learned counsel for the Revenue that in taxing statute, more latitute has been given to the persons entrusted with the implementation of the fiscal statute to fill in the details once the subject of levy has been specified clearly by the parent statute. IMPUGNED AMENDMENt ;