Taxation Provisions: Section 17(2)(viii) and Rule 3(7)(i) of Income Tax Act. Navigating the Boundaries of Legislative Delegation and Ensuring Equity in Taxation

Case Note & Summary

Income Tax Act, 1961 - Sections 17(2)(viii) and Rule 3(7)(i) - Constitutionality - Taxation of Fringe Benefits or Amenities - Essential Legislative Function - Benchmark for Interest-Free/Concessional Loans

I. Background and Legal Framework

Section 15 to 17 of the Income Tax Act Definition of 'Salary', 'Perquisites', and 'Profits in lieu of salary' Section 17(2)(viii) and Rule 3(7)(i): Taxation of Fringe Benefits/Amenities

II. Challenge and Issues

Challenged Provisions: Section 17(2)(viii) and Rule 3(7)(i) Grounds of Challenge: Excessive Delegation and Violation of Article 14 Two Main Issues: Delegation of Essential Legislative Function Arbitrariness and Violation of Article 14

III. Analysis of Delegation of Legislative Function

Essential Legislative Function Test Determination of Legislative Policy and Standards Examination of Legislative Intent and Guidance Provided Application of Essential Feature Test Precedents and Legal Framework Supporting Delegation

IV. Constitutionality of Rule 3(7)(i) under Article 14

Benchmarking Interest Rates: SBI's PLR Rationality and Fairness in Benchmark Selection Preventing Litigation, Ensuring Clarity, and Tax Efficiency Judicial Deference to Legislative Wisdom in Tax Matters Conclusion on Constitutionality under Article 14

V. Conclusion

Dismissal of Appeals and Upholding of Impugned Judgments No Order as to Costs