Telangana Grameena Bank Officers Association vs. Telangana Grameena Bank

[ 3302 I IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) IVIONDAY, THE TWENTY THIRD DAY OF MARCH TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE K. SARATH WRIT PETITION 33211 0F 2025 Between Telangana Grameena Bank Officers Association, (Registered No.E-1226) Rep. by its President Mr.Kranthi Kumar Makkad S/o.Ramesh Kumar Makkad, aged about 38 years Plot No.492, Flat No.202, Classic Arcade, l/latrusri Nagar, Miyapur, Hyderabad - 500049. Telangana Grameena Bank Employees Union, (Registered No.A-1419) Rep. by its President, Venu Rao Pabbathineni S/o. Mohan Rao.P, aged about 48 years Plot No.492, Flat No.202, Classic Arcade, Matrusri Nagar, Miyapur, Hyderabad - 500049. ...PETITIONERS AND 1. Telangana Grameena Bank, Rep. by its Chairman, D.No.2-1-520 2nd Floor, Vijaysii Sai Celestia Street No.9, Shankarmutt Road Hyderabad - 500044 2. State Bank of lndia, Rep.by its Chairman, Corporate Center, Vidhan Bhavan lt/larg, Nariman Point, Nlumbai, Maharashtra- 400 021. ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ or Order or Orders, Direction or Directions to declare the Circular No.Per/2025-26156, dt.15j02025 issued by the 1st Respondent Bank as arbitrary, illegal and unsustainable and to direct the 1st Respondent Bank not to affect any tax deduction at source of the income tax on the value of perquisites of the salaries paid to the officers/employees of the Bank. 1 2

l.A. NO: 1 OF 2025 PetitionunderSectionl5lCPCprayingthatinthecircumstancesstatedinthe affidavit filed in support of the petition, the High court may be pleased to suspend the circular No.Per/2 025-26t56, dt.15'1 0'2025 issued by the 1st Respondent Bank', pending disposal of the writ petition t. NO;20F Petition under section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to direct the 1st Respondent Bank to return the amount of deduction of TDS pertaining to the FY - 2024_2sbeing the income tax component on the value of perquisites on the salaries paid to the officers/employees, which was affected in the month of october' 2025' pending disposalof the writ petition' counselforthePetitioner:SRIVEDULASRINIVAS,ST.GOUNSEL,REP. SMT VEDULA CHITRALEKHA CounselfortheRespondentNo.l:SRlB.S.PRASAD,Sr.GOU^N.SE.L,REP. ' inr rvru.ltB KUMAR sADAslvuNl Counsel for the Respondent No'2: SRI A'KRISHNAM RAJU The Court made the following: ORDER

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HON'BLE SRI JUSTICE K.SARATH W.P.No.3 11 of 2O Date: 23.O3.2o26 Between: Telangana (]ramcena lfank Olflicers Association and another:. ... Petitioners And Telangana Gramocr-Ia i3anl< anil atrother. ...Respondents 9RDER: Ijeard Sri vcdula Srinivas, lcarned senior counsel appearing on bchalf Srnt.Vectula Chitralekha, learned counscl for thc pctitioncr-s, Sri 13.S.Prasad, learned Senior counsel appearing on behalf o[ sri Mujib Kumar Sadasivurri, learncd counscl frlr thc respondent No. I and sri A. Krishnam Raju, learned counsel appearing for the respondent N<1.2. 2. Ttris *.^ri'it petition is tilcci sueking to declare the Circular No. Per'/ 2A25'26 I 56, di.itr:C I 5. I O.2025 issued by the rcspondent No. I -Uank as illcgal and arbitrary and to

2 SK, J W.P.No.3ll2ll of2025 direct the respondent No.l-Bank not to affect any tax deduction at source of the income tax on the value of perquisites of the salaries paid to thc Otficcrs/ernployees o[ the Bank. Conte of the oe 3. Learned senior counsel for the petitioners submits that the petitioner No.1-Association represents the officers working in the respondent Bank, whereas the petitioner No.2-Union represents the staff working therein. The employees are paid salaries as per the prescribed pay scales and they are also provided with ccrtain perquisites which are non-monetary in nature. Irrom their salary, income tax will be deduced at source under section lg2(rl of the Income Tax Act, 1961 (for short 'the Act, 1961') and it will be credited to the account of the Government o[ India by the Bank itself, whereas the tax on the varue clf perquisites is concerned, as per sections rg2(rA), lgg(21 and lO(locc) of the Act, 196I, it wil be borne by the employer without deducting from the salary of the \ \

3 SK, J W.P.No.332 tt of 2025 employees while paying it to the Government of India. The deduction of the TDS on the perquisites came into effect from the assessment year, 2oo2-2oo3 and ail along the respondent Bank did not dercuct thc tax component of the value of the perquisites from the salaries of the employees. 4. Learned Senior counser for the petitioners further submits that earlier thc petitioncrs have liled w.p.No. 9026 of 2o15 questioning the action of the respondent Bank in deducing Tax component of the value of perquisites from thc salary ,[ thc officcrs/cmproyccs of thc Rank and this court has granted interim order directing the Bank not to deduct the tax on the value clf perquisites. Thereafter, the respondcnt Bank has sr.oppcd shr>wing the value of the perquisites on the totar salary of the officers/employees, issued Form- 16 and the otficers/employees have fired rcturns undcr I'[' Act cvcry -ycar basing on the income shown in Form- 16 and thus the tax component on the value of the perquisites is not deducted from the salar5r of the officers/employees by thc Bank. He submits that the respondent No.2-Bank, which is the sponsor Bank of the \ \ /1

4 SK, J W.P.No.332ll of 2025 respondent No.l-Bank issued Circular No.CD/P & HRSD- PM/ 772024-25 dated 15.03.2025 stating that the Executive Committee of the Central Board of the Bank in its meeting dated 11.03.2025 has approved that the Bank wilt bear income tax on perquisite value of 'staffing Housing Loans', Staff Car Loans' and Staff Education Loans' provided by the Bank for the eligible employecs and also clarified that on all other interest freefconcessional loans, the income tax has to be borne by the respective employees 5. Learned Senior Counsel for the petitioners further submits that the respondent Ncl. 1-Bank has issued Circular No.Perl 2025-25180 dated 17 .O3.2O25 clarifying that in view of the interim order passed in W.P.No.9026 of 2015, it was decided that income tax on perquisites u'ill neit be deducted at source during the financial year, 2024-25 subject to declaration/undertaking in Annexure-A submitted by the officer /ernployee and the petitioners have subrnitted a representation dated 1t].03.2025 objecting to give declaration/undertaking and requested for withdrawal

5 4 SK, J W.P.No.332 Ll of 2025 of that portion of the Circular and the sarne was replied by the Bank on 2O.O3.2O25 stating that it is only as a precautionary measure, such declarationlundertaking is being taken. He submits that notwithstanding the above Circular given by the sponsor Bank, the respondent No.1 dated 1 5. 10.2025 refcrring to the earlier Circular No.Per/2O24-25lBC dated 17 .O3.2O25 regarding deduction of tax on perquisites value c.rf staff loans for the financial Bank has issued Circular No.Per/ 2025-26156 year 2024-25 and submission of employee declaration/undertaking and the Rank has stated that as per the .Iudgment of the I-Ion'ble Supreme Court in All India Bank Officers' Confederation Vs. Regional Manager, Central Bank of Indial, it was decided to remit the income tax on perquisite value o[ salaries for financial year, 2024-25 and 2025-26 after deducting the s€une from the concerned staff members and the respondent No.l- Bank has resorted flor deduction of 1 l3.d of the tax value of perquisites pertaining to the year, 2024-25 from the salary 'lzoz+y 9 scc 664 L

6 SK, J W.P.No.332ll of 2025 of the officers/employees of the Bank payable in the month of October and the remaining 213'a amount is gcling to be deducted from their salaries of November and Decr:mber, 2025. 6. Learned Senior Counsel for thc pctitioners further submits that admittedly, since last 1 0 years, the respondent Bank did not deduct tax component on the value of perquisites from the salary of the officers/employees and suddenly taken decision under thc impugned Circular dated 15.1O.2O25. He further submits that the petitioners are entitled for claiming the lncome Tax on the component value of perquisites of their salarics to bc borne by the respondent No.2-Bank since the Award of the National lndustrial Tribunal is binding on the said Bank and more over, the Circular issued by the sponsor Bank cannot be deviated flrom the respondent No. 1 and since the respondent No. 1 is going to deduct the remaining 21 3,a amount of income tax on the value of perquisites pertaining to the yetr, 2024-25 from their salaries for the months of \Norr"*ber and Decemb er, 2o2s, he requested to allow the

@ 'i/W .9' ."/' 7 SK, J W.P.No.332ll of 2025 writ petition by directing the respondent No. 1 Bank not to affect any tax deduction at source of the income tax on the value of perquisites of the salaries paid to the oflicers/employees of the Bank Contentions of the respondent No.t: 7. Learned Senior Counsel for the respondent No. 1- Bank basing on the counter submits that the respondent No.2-Bank is the Sponsor Bank of the respondent No. 1 and it has no role in the running lmanaging the day-to-day afll'airs of thc respondent No. I -Bank and the tax on salaries and allowances of its employees will be deducted at source by the respondent No.1-Bank in terms of Section 192(1) of the Act, 196L. He submits that the conjoint reading of the provisions of Section 192 of the Act, 196I- Salary, Section 17{2) of the Act, 1961.-perquisites and Section 17(3) of the Act, I961- Valuation of perquisites, the perquisites in the lorm of concessional valucs of loans and advances extended to the employees are liable to be taxed treating them on par with salaries. He submits that Section Lg2(lA)

B SK, J W.P.No.332ll of 2025 of the Act,l 961 gives liberty to the employer to exercise option of deduction of TDS or remitting it all by himself and this liberty is neither restricted nor limited. Further, as per Section 10(1OCC) of the Act, there is no obligation cast on the respondcnt No.1-Bank to pay taxes on the value of non- monetary perquisites as mentioned in Section 17(21 of the Act, Lg61 and the employer is given an option to bear the liability and the interpretation of the petitioners is contrary to the express language and intend of the statute. 8. Learned Senior Cclunsel for the respondent No.1- Bank further submits that as per the Circular No.1712O14 vide F.No.27 5l l93l2Ol4-I'l(Bl dated 10. 12.2014, the Central Bclard of Direct Taxes, New Delhi has clarified that the employer at its option to deduct tax at source on non- monetary perquisites paid to its employee. The said Circular was issued for the Assessment Year 2Ol4-15 and in pursuance of the said Circular, the respondent No. 1- Bank had taken a decision t<l exercise its option of deducting til( at source on non-monetar5r perquisites paid to employees. When the respondent No. 1 Bank took steps t

:-. Y-ffi SK, J W.P.No.332ll of 2025 for implementing such deductions, the Association and union of the respondent No. I have filed w.p.No.9o26 of 20 | 5 and obtained interim order dared O I .O4 .2O ls directing the respondent No. I Bank therein not to deduct tax at source on the non-monetary value of the perquisites paid by it, to its employees. He flurther submits that as per the decision of the Honble Su preme court in All India Bank Officers' Confederation's case (supra 1), the respondent No. 1-Bank is bound to remit the appropriate taxes r>n the value of thc perquisites in question for the financial years, 2024-25 and 2025-26 after deducting the samc from the salary of its employecs and accordingly issued the impugned Circular No.Per/ 2025-26156 dated 15. 10.2025 for deduction of tax on the value of the pcrquisites from the salary of the concerncd staff members for the financial years 2024-25 and 2025-26 9. Learned Senior Counsel for the respondent No. 1- Bank further submits that the petitioners without challenging the provisions of the Income Tax Act, 1961 nor the circular issued by the CBDT in this regard have

10 SK, J W.P.No.332l1 of 2025 challenged the consequential proceedings or action of the respondent N<1.l-Bank cspccially when it is in tunc with the statute and the law on the subject. 10. Learned Senior Counsel for the respondent No.l submits that the SBI's internal decision not to deduct tax at source on the non-monetary perquisite value of its employees is purely an internal decision and is not binding on the respondent No.l-Bank as SBI is a large commr:rcial Bank with incomparable financial strength and the respondent No. 1 Bank is a Regional Rural Bank with limited operational scope and the rcspondent No. i -Bank has acted strictly as per the Statute, Circulars issued by the CBDT 11. Learned Senior Counscl for the respondent No.l further submits that the undertaking signed by the employees of the respondcnt No.l-Bank cannot be termed as a mere formality or measure taken by it and it is clear and fixes liability on the employees and pursuant to the undertaking furnished by all the employees of the

,. ' -,'.:,,I]iM tl 11 SK, J W.P.No.332ll of 2025 respondent No. l-Bank, it has issued the impugned circular and its decision to deduct TDS is legally correct and much nccessary after the dccision of the Hon'ble Supreme Court in All India Bank Officers, confederation's case (supra 1) and requested to dismiss the writ pctition. Considerations and Findings: L2. After hearing both sides and perusal of the record, this Court is of the considered view that the issue involved i in the present writ petition is that the members of the petitioner No. I -Association have to pay the tax on perquisites as per the circular issued by the respond.ent No. 1 in circular No.Per/ 2o2s-26 I s6 dated 15. 1 o.2o2s. The respondent No. I -Bank is Regional Rural Bank established under Regional Rural Banks Act, lgr6 and the said Bank is sponsored by the State Bank of India. 13. The contentions raised by the petitioners and also the respondents have considered. by the Honbte supreme

t2 SK, J W.l'.No.3ll2l1 of 2025 Court in the s€une issue in All India Bank Officers, Confederation's case (supra 1). The relevant portions of the said Judgment are as follows; "This common judgment decides the appeals filed by staff unions and officers' associations of ',,arious banks, impugning judgments lAll lndia pNf) Officers'Assn. v. Punjab National tlank, (2010) 321 ITI? 324 : 2009 SCC online MP 7531 'lAll tndia union llank officers Federationv. union of India, (2016) 385 ITR ll4:2016 scc online Mad9729l which dismiss their writ petitions, where the vires of Section 17(21(uiit) of the Income Tax Act, 1961 (for short "the Act") or Rule 3(7)(r) of ttre [ncome Tax Rules, 1962 (for short "the Rules"), or both, were challenged. xxxxx 8. Section l7(1), provides a broad and inclusive definition of "salarv". It states that salary, inter alia, includes wages as well as other payments paid to employees like perquisites. Thus, perquisites paid by the employer to the employee are taxable as "salary'. 9. "Perquisite" has been defined in Section 17(21 for clarity, and also, to include and rviden its scope. clauses (4 to (uii-a) to Section 17(2) make the following taxable as "perquisites": (a) Clause (d - rent-free accommodation by emplo-r,er. (b) Clause (irJ - accommodation at a concessional rate by employer. (c) Clause (ir4 -- benefit of amenit.v provided free of cost/at a concessional rate, in specified cases. (d) Clause (iul - sum paid by the employer for an obligation. (e) clause (ul - sum payable b-r, the employer ttrrougtr a fund (barring specified exceptions) tcl effect an assurance on the life of ttre assessee or to effect a contract lor annuity. Ul Clause (ul specified security or sweat equity shares allotted/transferred by employer at corrcessional rate/free of cost. (g) Clause (ui4 -- specified amounl.s corrtributed to assessee's account by emplo-1,g1 such as provident fund, sulterannuation funcl, ctc. (h) Clause (uii al -- annual accretion bv nay ol'interest, dividend or otfrer similar amounts with respect to clause (uir). Xxxxx 15. tn the present case, Section lr(21(uiit) is a residuary clause, enacted to provide flexibility. Since it is enacted as an enabring catch-within-domain provision, the residuaryz clause is not iron-cast and exacting. A more pragmatic and commonsensical approactr can be adopted by rJcating ttre

13 SK, J W.P.No.332ll of 2025 prevalent meaning of "perquisites" in common parlance and commercial usage. 16. The expression "perquisite" is well-understood by a common person who is conversant with the subject-matter of a taxing statute. Neut International Webster's Comprehensiue Dictionary defines "perquisites" as any incidental profit from service bev-ond salary or wages; hence, any privilege or benefit claimed due. [The New International Webster's Contprehensiue DictionarA, p. 94 l.l "[i'ringe benefit" is delined as an-y of the various benefits received from an employcr apart t'rorn salarv, such as insurancc, pension, vacation, etc. Similarly, Black's Law Dictionary delines "fringe benelit" as a benefit (other than direct salary or compensation) received by an employee from the employer, such as insurance, a company car, or a tuition allowance. lBlack's Law Dictionary(loth Bdn.), p. 188.] The Major Law Lexiconhas elaborately defined the words "perqui:site" and "fringe benelit". { Perquisite means something gained by a place or office beyond the regular salary or fee. It is a gain or profit incidentally made from employment. P. Ramanatha Aiyar, The Major Law Lexicon, Vol. 5 (4th !)dn.), pp. 5059-5069.F-ringe benelit is a term embracing a varietl' of employees' benefits, paid by the employers and supplemcnting the u'orkers' basic wagc or salary. P. Ramanatha Aiyar, Ihe Major Law Lericon, Vr.rl. 3 (4th Edn.).1 xxxxxxx 19. Thus, "perquisite" is a fringe bene{it attached to the post held by the employee unlike "profit in lieu of salary", which is a reward or recompense for past or futurc service. It is incidental to employment and in excess of or in addition to the salaryz. [t is an advantage or benefit given because of emplo)rpspt, r.t,hich other'*,ise would not be available. 2O. Irrom this perspective, the cmployer's grant of interest-free loans or loans at a concessional rate rvill certainly qualify as a "fringe benefit" and "perquisite", as understood through its natural usage in common parlance. xxxxxx l. Does Secf,ion 17(2)(viii) and/or Rule 3(7)(i) lead to a delegation of the "essential legislatiae function" to the CBDT? 22. A Constitution Rcnch of scven.Iudges of this Court in MCDv. BirlaCotton Spg & Wug. Mills[tVlCI)v. I]irla Cotlon Spg.& Wug. Mills, 1968 SCC Online SC 131 , has held that the lcgislature must retain with itself the essential Iegislative function. "h)ssential legislative function" means the determination of the legislative policy and its formulation as a binding rule of conduct. Therefore, once the legislature declares the legislative policy and lays down the standard through legislation, it can Ieave the remainder of the task to subordinate legislation. In such cases, the subordinate legislation is ancillary to the primary' statute. lt aligns with the framework of the primary legislation as long as it is made consistent rvitlr it, w'ithout exceeding the limits of policy and standards sLipulated b_v the primary lcgislation. The test, therefore, is whether the primary legislation has stated with sufficient clarity, the legislative polic-v and the standards that are binding on subordinate authorities who frame the delegated legislation. xxxxxxx 32. We are of the opinion that the enactment of subordinate legislation for levying tax on interest flree/concessional loans as a fringe benefit is within the rulc making power under Scction 17(21(uiit) of the Act. Section 17(2)(uiirJ itself, and the enactment ol liulc 3(7)(rJ is not a case of excessive delegation and falls within the parameters of permissible delegation. Section 17(21 clearly

-tEta -Eqq 14 SK, J W.p.No.3il2 tt of 2O2S delineates the legislative_ policSz and lays down standards for the rule-making authority. Accordingll,, Rule 3(7)(rJ is intra vires Secrion l7(21(uiit) of the Aci. Section l7(21(uiit) does not lead to an excessive delegation of the "essential legislative function ". xxxxxx ll. Is Rule 3(7)(i) arbitrary and violative of Article 74 of the Constitution insofar as it treats the pLR of SBI as the benchmq.rk? 33. ttule 3(7)(4 posits SBI's rare o[ interest, that is the pLIl, as t]re benchmark to deterrnine the value of benctit to the assessee in comparison t6 the rate of interest charged by other individual banks. The fixation of SBI's rate of interest as the benchmark is neither an arbitrary nor unequal exercise of power. The rule-making authority has not treated unequal as equals. The benefit enjoyed by bank employees from interest-free loans or loans at a concessional rate is a unique benefit/advantage enjoyed by them. It is in the nature of a "perquisite", and hence is liablc to taxation. 34. Rule 3(7)(4, it can be hardly argued, is arbitrary or irrationar for the reason it benchmarks computation of thc perquisite with refererrce to SIJI's PLR. SBI is the largest bank in the countr.v and thc interest rates fixed by them invariably impact and affect the interest rates being charged by other banks. By fixing a single clear benchmark for computation"of the perquisite or fringe benefit, the rule prevents ascertainment of the interest rates being charged by different banks from the customers and, thus, checks unnecessary litigation. 14. All the contentions raised b5r the petitioners have been considered by the Hon'ble supreme court in the above finding. In view of the same, there are no merits in the present writ petition and thc same is liable to be dismissed in the light of the orders of the Hon,ble Supreme court in All India Bank officers' confederation,s case (supra 11. [n view or the same, the members or the petitioner No. l-Association have to pay the income tax on the value of perquisites of the salaries paid to the \

, ":;'T_ pr \1/ v 15 \ SK, J W.P.No.332ll of 2025 officers/employees of the Bank as per the Circular No.Perl2O25-26 /56 dated 15. 1O.2O25. 15. Moreover, the petitioners without challenging the Circular issued by the respondent No.1 in Circular No. Per/ 2024-25 / BO dated L7 .03.2025 and given undertaking have challenged the Circular No.Per/2025- 26 /56 dated I 5. I 0.2025. In view of the same, as the petitioners are questioning the consequential Circular without challenging the preliminary Circular, the writ petition is not maintainable. 16. The contention of the petitioners is that the employees in the respondent No. 1-Bank are entitled for all benefits on par with the employees of sponsor Bank as per the Award passed by the National Industrial Tribunal dated 30.04.199O. But the orders of the Honble Supreme Court in All India Bank Officers' Confederation's case (supra 1) prevail over the National Industrial Tribunal Award and there is no iltegality in issuing the impugned \

16 SK, J W.P.No.332ll ol2025 Circular warranting interference by this Court in the instant case 17. In view of the above findings, the writ Petition is dismissed. No order as to costs 18. Miscellaneous petitions, if any pending in this writ petition, shall stand closed. /TRUE COPY/ SD'-P. PONNA KRISHNA ASSISTANTAEGISTRAR s:ecffNoFFlcER To, BSR BS l.oneCCtoSRlVEDULACHITRALEKHA,AdvocateIoPUC] 2.oneCCtoSRlMUJ|BKUMARSADASIVUNI,Advocate[oPUC] 3. One CC to SRI A.KRISHNAM RAJU' Advocate [OPUC] 4. Two CD CoPies N7

HIGH COURT DATED i 2310312026 ORDER WP.No.33211 of 2025 DISMISSING THE WRIT PETITION, WITHOUT COSTS HE 1 3 o1 At,it 2o26 * ^ ,.. i: *)' ..t{if1r..t ,'.,';,f \ \d