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2023 (9) TMI 693 - HC - Income TaxPerquisites - where the employer has advanced any loan to the employee for the purpose of building a house or purchasing a site or a house and a site or for purchasing a motor car, and either no interest is charged by the employer - Validity of Section 17(2)(vi) of the Income Tax Act, 1961, as inserted by the Finance Act, 2001 (Act No. 14 of 2001) w.e.f., 01.04.2002) - the petitioner-association also seeks to challenge the validity of Rule 3 of the Income Tax Rules, 1962, as substituted by the Income Tax (22nd Amendment) Rules 2001 by notification dated 25.09.2001 on the ground that the same is hit by the vice of excessive delegation - HELD THAT - Section 17(2)(vi) of the Income Tax Act, 1961, which was inserted by the Finance Act, 2001 w.e.f., 01.04.2002 provision has been substituted by the Finance Act, 2005 (18 of 2005 w.e.f., 01.04.2006) and thereafter, the same has been substituted by the Finance (No. 2) Act, 2009 (33 of 2009). Therefore, the challenge to the aforesaid provision has been rendered academic by efflux of time. The petitioner has assailed the validity of Rule 3 of the Income Tax Rules, 1962, as substituted by the Income Tax (22nd Amendment) Rules, 2001. The validity of the aforesaid provision has been examined by various High Courts. In P.N. TIWARI V. UNION OF INDIA (2003) 2003 (9) TMI 52 - ALLAHABAD HIGH COURT upheld the validity of Rule 3. Similarly, in BHEL EMPLOYEES ASSOCIATION v. UNION OF INDIA 2003 (2) TMI 48 - KARNATAKA HIGH COURT as upheld the validity of Rule 3. Similar view was taken by a Division Bench of Madras High Court in BHEL EXECUTIVES OFFICERS ASSOCIATION 2003 (4) TMI 10 - MADRAS HIGH COURT We respectfully agree with the view taken by various Division Benches of Allahabad, Karnataka and Madras High Courts.
Issues involved:
The validity of Section 17(2)(vi) of the Income Tax Act, 1961 and Rule 3 of the Income Tax Rules, 1962 challenged on grounds of excessive delegation. Validity of Section 17(2)(vi) of the Income Tax Act, 1961: The petitioner-association sought to quash Section 17(2)(vi) of the Income Tax Act, 1961, inserted by the Finance Act, 2001, alleging it to be violative of the Constitution of India. The provision pertained to loans advanced by employers to employees for specific purposes without charging interest or at a lower rate. However, subsequent amendments made the challenge academic due to the passage of time. Validity of Rule 3 of the Income Tax Rules, 1962: The petitioner also challenged the validity of Rule 3 of the Income Tax Rules, 1962, substituted by the Income Tax (22nd Amendment) Rules, 2001, citing excessive delegation. Various High Courts, including Allahabad, Karnataka, and Madras, had upheld the validity of Rule 3 in separate cases. The High Court, concurring with these decisions, dismissed the writ petition, stating no costs were awarded. Conclusion: The High Court dismissed the writ petition challenging the validity of Section 17(2)(vi) of the Income Tax Act, 1961, and Rule 3 of the Income Tax Rules, 1962, due to subsequent amendments and previous rulings upholding the provisions' legality. The court concurred with decisions from other High Courts and closed any related pending petitions.
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