The division bench of Madras High Court has upheld the constitutional validity of Section 17(2)(viii) of the Income Tax Act, 1961 in a writ petition filed by All India Bank Officers’ Confederation. The petitioners pleaded for a declaration that Section 17(2)(viii) of the Income-Tax Act, 1961, is unconstitutional and ultra vires.
The petitioners challenged section 17(2)(viii) on the ground that instead of clearly providing what is a fringe benefit or amenity, that comes within the purview of the definition of the expression “perquisite”, the impugned provision has left it to the Executive to prescribe what a fringe benefit is. However, Section 115WB of the Income-Tax Act, 1961, defines fringe benefit by itself.
The Petitioners also alleged that, once the statute defines the expression “fringe benefit”, there is no question of delegating the power of prescribing what a fringe benefit is, to the Executive. Section 17(2), it merely defines what a perquisite is. Sub-section (2) of Section 17 is an inclusive definition. It contains about eight Clauses. Clauses (vi) to (viii) were substituted by Finance Act 2 of 2009 with effect from 1.4.2010. After this amendment, any fringe benefit or amenity as may be prescribed by a subordinate legislation, is included within the meaning of the expression “perquisite” under Section 17(2).
The division bench of Justice V. Ramasubramanian and Justice N.Kirubakaran while dismissing the petition observed that, as far as Section 115WB is concerned, the same defines fringe benefits for the purpose of Chapter XII-H. Under Chapter XII-H, an additional income-tax known as fringe benefit tax, was sought to be imposed under Section 115WA. Therefore, the benefits listed out in Clauses (a) to (d), in sub-section (1) of Section 115WB, relate only to the fringe benefit tax chargeable under Section 115WA. This cannot be extended to Section 17(2). In any case, with effect from 1.4.2010, Chapter XII-H has gone. Therefore, the only ground of challenge is not liable to be sustained.
Read the full text of the order below.
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