Airports Authority Employees Union (Regd.No.3535), V. Union of India,

WP/6114/2002

AI Insights

The Airports Authority Employees Union filed a writ petition challenging the validity of Section 17(2)(vi) of the Income Tax Act, 1961, as amended by the Finance Act, 2001, and Rule 3 of the Income Tax Rules, 1962, as amended by the Income Tax (22nd Amendment) Rules, 2001. The petitioner argued that these provisions were unconstitutional and violated Articles 19(1)(G) and 246 of the Constitution of India. The respondents, including the Union of India and the Central Board of Direct Taxes, defended the provisions. The court dismissed the petition, citing academic obsolescence of the challenged section due to later amendments and upholding the rule based on precedents from other High Courts.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 725651 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 05-09-2023
• Assessment Year: misc
• Other Referred Cases: P.N. TIWARI V. UNION OF INDIA, BHEL EMPLOYEES' ASSOCIATION V. UNION OF INDIA, BHEL EXECUTIVES' OFFICERS ASSOCIATION V. DY. CIT
• Laws Referred To: Income Tax Act, 1961, Finance Act, 2001, Income Tax Rules, 1962, Finance Act, 2005, Finance (No. 2) Act, 2009
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GADI PRAVEEN KUMAR; ADHI VENKATESWARA RAO
• Assessee Lawyers: P B VIJAY KUMAR
• Keywords: Excessive Delegation; Finance act; Income Tax; Mandamus; Unconstitutional
• Section: 17(2)(vi)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original J urisdiction) TUESDAY, THE FIFTH DAY OF SEPTEI ,4BER TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE THE CHIEF JUSTICE ALOK ARADHE AND Between: Airports Authority Employees Union (Regd. No.3535),, Rep. by its President S.R.Santhanam, S/o. Late R.S.Raghavan, R/o. R-28A, AAI Airport Quarters, Allah- uddin Buildiang side, Begumpet, Hyderabad - 16. .....PETITIONER AND 1. Union of India, Rep. by its Secretary, l ,4inistry of Finance, New Delhi - 110 001. 2- Central Board of Direct Taxes, Rep. by its Secretary, Government of lndia, t /inistry of Finance, Department of Revenue, New Delhi, rep by its Secretary. 3. Chairman, Airpo(s Authority of lndia, Rajiv Gandhi Bhavan, Operational Complex, Safdarjung Airpot, New Delhi. ,....RESPONDENTS Petition Under Article 226 oI the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue any writ, order or direction particularly one in the nature of MANDAIVIUS and (i) struck down or quash the impugned Section 17(2) (vi) of the lncome Tax Act, 1961 as inserted by Finance Act 2001 as illegal being violative of articles 19(1XG) 246 o'f the Constitution of lndia, and (ii) grant the consequential relief by declaring Rule 3 of the lncome Tax Rules, 1962 as substituted by lncome T ax (22nd Amend ment) Rules 2001 by the Second Respondent under its Notification No. S.O. 94O(E) dated 25-9-2001 as illegal and unconstitutional being hit by the vice of excessive delegation. [ 3377 ] THE HONOURABLE SRI JUSTICE N.V.SHRAVAN KUMAR WRIT PETITION NO: 6114 OF 2002 l.A. NO: 1 OF 2002(WPl lP. NO: 7659 OF 2002) ' Petition under Se ction 151 CPC praying that in the circLmstarrces stated in the affidavit filed in support of the petition, the High Ccurt may be pleased to stay the operation of th: Provisions of Section 17(2) (vt) of the lnconre Tax Act, '1961 as inserted by the Finance Act 2001 and also Ruler 3 of tl-e lncome Tax Rules, 1962 as substitu ed under the lncome Tax (2nd Arrendmert) Flules,2001 under the Notification o' the 2nd Respondent bearing No. S.O.S)4tl(E) dated 25. 9-2001. Counsel for the Petitior er : Sri P.B.Vijay Kumar Counsel for the Respordent Nos.1 & 2 : Sri Gadi Praveen Kum;rr, Dy. Solicitor Gerreral c'f lndia Counsel for the Respondent No.3 : Sri Adhi Venkateswarir Rao The Court made the follrwing Order :- TIIE HON'BLE THI] CHIEII.ITJSTICE ALOK ARADIIE ANI) THTI IION'BI,E SRI JUSl'I(]I.] N.V.SIIRAVAN KUN,IAR '.P.No.6l l.l OF 2002 QBI)E&. fi'.,,i, e Hon'ble thc Chie.f Jurirt, ..1tok ttatht) The pctitioner-association, namcly Airports Authority Employees' Union, has prayed lbr the lbllowing reliefs: \"For the reasons staled in the accompanying affidavit, it is hereby prayed that this Hon'ble Court may be pleased to issue any writ, order or direction particularly one in the nature of Mandamus and (i) struck down or quash the impugned Section 17(2) (vi) of the lncome Tax Act, 196'l as inserted by Finance Act 2001 as illegal, being violative of articles 19(1)(G) 246 of the Constitution of lndia; and (ii) grant the consequenlial relief by declaring Rule 3 of the lncome Tax Rules, 1962, as substituted by lncome Tax (22^d Amendment) Rules 2001 by the second respondent under its NotificaUon No.S.O. 940(E) dated 25.09.2001 as illegal and unconstitulional, being hit by the vice of excessive delegation, and and pass such other relief or reliefs, as this honourable court may deem fit and necessary in the circumstances of the case. i 2 , 2. In lhis writ petition, thc petitio ner-as-s -'rci Ition has assailcd tl,e validity of Scction l7(2)(vi) ol' tlrc In,:omc 'fax Act, 1961. as inserted by the Finance Act,200l (, ct No. l4 of 2001) w.r:.1., 01 .04.2002). Thc petitioner-ais,)cirltion also seeks to challenge the validity ol' Rul: 3 rl' the Income Tax Rult:s. 1962, as substituted by the Inccme Tax (22\"0 Arrendment) Rules 2001 by notill,:aticr.r dated 25.09.2001 on the grouncl that the same is hit hy the vice of excessive delegation. 3. Nore has appeared on behalf of th,-' pctitioncr. whereas Sri Mr. M.Rama Krishna, iearned counscl rcpreserrting Mr. Gadi Praveen Kumar, Dcputy Solici or Gencral of India, has appeared on behalf of the rcspondents antl has submitted that the issue involved in this writ p,:tition har; rendered academic on account ofsubsequent events. 4. We have perused thc record. r 5. Section l7(2)(vi) of the Income Tax Act, 1961, which was inserted by the Finance Act, 200 I w.e.f., 01.04.2002, reads as under \"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 on the amount of such loan or interest is charged at a rate lower than the rate of interest which the Central Government may, having regard to the rate of interest charged by it from its employee on loans for such purpose granted to them, specify in this behalf to notification in the official gazettee, an amount equal to- (a) in a case where such loans is advanced without charging any interest, the interest calculated in the prescribed manner on such loans at the rate so specified. in a case where such loans is advanced by charging interest a rate lower than the rate so specified, the difference between the interest calculated in the prescribed manner on such loans at the rate so specified and the interest charged by the employer\". (b) The aforesaid provision has been substituted by the Finance Act, 2005 (18 of 2005 w.e.f., 0l .04.2006) and thereafter, the l same has been substituted $, the Finance (No. 2) Act, 2009 I 4 (33 of 20t)9). Therelbre, the challcng,-' lo tl e rtbrcsaid provision has been rendercd acadernic by el'l1ux o('tinre. 6. The petitioner has assailed the valid ty of Rulc 3 ol'the Inconre Tax Rules, 1962, as substituted by th: lncorne Tax (22n'r Amerrdment) Rules, 2001. The valitlitl, ol'Ihe afirresaid provision has been cxanrined by vitn ous lligh Clourts. In P.N.TIW'ARI V. UNION OF INDiAr, ,h: rtttahabad High Cour. upheld the validity of Rule 3. Sirnilally, in BHEL EN{PLOYEES' ASSOCIATION r,. UN ION OF INDIA'?. a Division llcnch o1'Karnataka High Court Irar; upheld the validity o1'Rule 3. Sirnilar view was ttkerr b'r a Division Bcnch of l 4adras High Court in BHEL E.{I,CUTMS' OFFICEIIS ASSOCIA'IION v. DY. Cl'lr 7. We respectfully agree with the view takea by various Division Ilenches of Allahabad, Karnatal.a anri 4aCras High Courts. '1zoo:; l3l'faxman 482 '7[2003] l2rl 'faxrnan 309 r[2004] 26 ) ITR 390 8 For the aforementioned reasons, thc writ petition fails and is hereby disrnissed. No order as to costs. As a sequel,, tniscellaneous petitions, pencling if any, stand closed. //TRUE COPY// SD/. K. VENKAIAH ASSISTANT REGISTRAR Cir, SECTION OFFICER I To 1 2 3 4 One CC One CC One CC Two CD to Sri P.B.Vijay Kumar, Advocate [OPUC] to Sri Gadi Praveen Kumar, Deputy Solicitor General of lndia [OPUC] to Sri Adhi Venkateswara Rao, Advocate [OPUC] Copies SA GJ I i HIGH COURT DATED:0510912023 ORDER WP.No.6114 t>l 2002 DISMISSING THE W.P WITHOUT CC STS. I1 STP ?SB .+ b1 / i$ ,, t' .-: 1-. ,- gTATE o .,,,< , '{ DEsPtl ,,,)- Qi) N t( rqFI ^v> "