Employees of ‘IISc’ can’t be treated on par with Central Govt. employees for valuation of perquisite under Rule 3

Case Details: Indian Institute of Science v. DCIT - [2022] 141 taxmann.com 354 (SC)

Judiciary and Counsel Details

• • M.R. Shah & B.V. Nagarathna, JJ.
  • Arvind P. Datar, Sr. Adv. Ms Kavita Jha, AOR & Anant Mann, Adv. for the Petitioner.

Facts of the Case

For the purposes of valuation of perquisite of rent-free accommodation or concessional rent accommodation under section 17(2) read with Table I of Rule 3, employees of Indian Institute of Science cannot be treated at par with Central/State Government employees even if petitioner (Indian Institute of Science) may be considered as a State instrumentality within the definition of Article 12 of the Constitution of India. 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.

Supreme Court Held

The Supreme Court upheld the findings and was in complete agreement with the view taken by the High Court. It was held by the High Court that even if the petitioner-Indian Institute of Science (IISc) may be considered as a State instrumentality within the definition of Article 12 of the Constitution of India, it cannot be treated at par with the Central/State Government employees under Table-I of Rule 3 of the Income Tax Rules, 1962.

Said rules apply to the Government employees to compute the value of perquisites under Section 17(2). Thus, 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 and its employees are Government employees.