All India Central Bank Officers Federation Vs Union of India (Bombay High Court)
Bombay High Court held that Explanation 1 and 4 below section 17(2) of the Income Tax Act by the Finance Act, 2007 cannot be declared ultra-vires, irrational or unconstitutional. Said amendments are constitutionally valid.
Facts- The Petitioners are Associations/Federations of the officers of nationalised banks. They purport to represent the bank officers. In some of the Petitions, there was a prayer for a grant of leave to prosecute these Petitions in a representative capacity. However, such prayers were not pursued, possibly because the Petitioners felt that if the impugned provisions of the Income Tax Act, 1961 were struck down, then the benefit of such striking down would inure to all the bank officers and not just the bank officers whom the Petitioners expressly represent.
Though the reliefs in some of these Petitions are somewhat convoluted and confused, the Petitioners mainly challenge Explanations 1 and 4 below Section 17(2) of the IT Act by the Finance Act, 2007, which entered force with limited retrospective effect. [Explanations 1 to 3 from 1 April 2002, and explanation 4, from 1 April 2006]. (impugned amendments).
The impugned amendments introduced a legal fiction that an employee shall be deemed to have received a concession in the value of rentals once it was established that the employee was provided an employer-owned accommodation and the rent recoverable or payable by the employee-assessee was less than the specified percentage of such employee’s salary.
