2022 (10) TMI 242 - SCH - Income Tax

Review petition - Computing value of perquisites under Section 17(2) - assessee is a Trust constituted under Charitable Endowment Act 1890 - whether petitioner to be considered as a State instrumentality within the definition of Article 12 of the Constitution of India - finding recorded by the High Court that even if the petitioner may be considered as a State instrumentality within the definition of Article 12 of the Constitution of India the same cannot be treated at par with the Central/State Government employees under Table-I of Rule 3 of the Income Tax Rules 1962 and that the rules applicable to the government employees for the purpose of computing the value of perquisites under Section 17(2) of the Act would be applicable in the case of the petitioner - HELD THAT - Rules applicable to the government employees for the purpose of computing the value of perquisites u/s 17(2) of the Act would be applicable in the case of the petitioner is concerned we are in complete agreement with the view taken by the High Court. Merely because the petitioner might have adopted the Central Government Rules and/or the pay-scales etc. by that itself it cannot be said that the petitioner is a Central/State Government. No interference of this Court is called for. Insofar as the merits of the claim is concerned according to Shri Datar learned Senior Advocate some of the crucial aspects have not been considered on merits by the High Court and therefore the petitioner proposes to file a review application before the High Court pointing out certain aspects on merits. Without expressing anything on the same we simply permit the petitioner to file a review application on the aforesaid only. As and when such a review application is filed the same be considered in accordance with law and on its own merits for which this Court has not expressed anything in favour of either of the parties. It is made clear that the petitioner is not permitted to file the review on the aspect which is concluded as above namely that whether the petitioner can be treated at par with the Central/State Government employees or not for the purpose of Section 17. Special Leave Petitions stand dismissed

Summary

Issues:
Interpretation of Article 12 of the Constitution of India for defining State instrumentality; Applicability of Central/State Government rules on perquisites under Section 17(2) of the Income Tax Act; Permission to file a review application on certain aspects of the case.

Interpretation of Article 12 of the Constitution of India:
The Supreme Court examined whether the petitioner could be considered a State instrumentality within the definition of Article 12 of the Constitution of India. The High Court's finding that the petitioner, even if falling under Article 12, cannot be equated with Central/State Government employees under Rule 3 of the Income Tax Rules, 1962 was upheld. The Court emphasized that adopting Central Government Rules or pay-scales does not automatically categorize the petitioner as a Central/State Government entity. The judgment affirmed that no interference by the Court was necessary on this issue.

Applicability of Central/State Government rules on perquisites under Section 17(2) of the Income Tax Act:
Regarding the computation of perquisites under Section 17(2) of the Income Tax Act, the Court agreed with the High Court's ruling that the rules applicable to government employees would be relevant. The petitioner's contention that crucial aspects were not adequately considered on merits was acknowledged. The Court allowed the petitioner to file a review application before the High Court to address these aspects. However, the Court clarified that the review application should focus solely on the identified aspects and not challenge the conclusion regarding the petitioner's classification concerning Central/State Government employees for Section 17 purposes.

Permission to file a review application on certain aspects of the case:
The Supreme Court granted permission to the petitioner to file a review application specifically addressing the crucial aspects that were allegedly not fully considered by the High Court. The Court emphasized that any review filed should adhere to legal procedures and be evaluated on its own merits. Notably, the Court prohibited the petitioner from challenging the aspect already determined concerning the petitioner's equivalence with Central/State Government employees for Section 17 purposes. Consequently, the Special Leave Petitions were dismissed/disposed of by the Court.

This detailed analysis of the Supreme Court judgment highlights the key issues addressed, the Court's findings, and the permissions granted to the petitioner for further legal action within the specified parameters.