BHEL WORKERS UNION vs UNION OF INDIA

The Supreme Court addressed the validity of Rule 3 of the Income Tax Rules, 1962, as amended by the Income Tax (Twenty-second) Amendment Rules, 2001, which pertains to the computation of perquisites under Section 17(2) of the Income Tax Act, 1961. The Court held that the previous judgment in Arun Kumar & Others vs. Union of India did not strike down Rule 3 but read it down to align with Section 17(2)(ii) of the Act. The appeals were disposed of in accordance with this precedent, noting a subsequent legislative amendment that added an 'Explanation 1' to Section 17(2) effective from 1.4.2002, which the Court did not challenge as it was not before them.