In Brief
The Supreme Court upheld the constitutional validity of Section 17(2)(viii) of the Income Tax Act, 1961 and Rule 3(7)(i) of the Income Tax Rules, 1962, which treat interest-free and concessional loans provided by banks to employees as taxable fringe benefits (perquisites). The Court rejected the challenge that these provisions involved excessive delegation of legislative power to the tax authority, holding that the statute clearly defines the scope—only 'fringe benefits' or 'amenities' can be prescribed. The Court also upheld using SBI's Prime Lending Rate as the benchmark for computing the taxable benefit, finding it neither arbitrary nor violative of equality rights. The Court emphasized that tax legislation enjoys greater latitude and that fixing a uniform benchmark ensures clarity, consistency, and prevents unnecessary litigation.
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