Judgment :- P. SATHASHIVAM, J. The petitioners numbering 16 who are employees of Bharat Heavy Electricals Ltd., Ranipet, aggrieved by the Circular dt. 12th February, 1990 of the third respondent have approached this Court for quashing the same and for direction directing the respondents to refund the tax if any deducted from the salary of the petitioners herein on the amount of interest paid to HDFC, on behalf of the petitioners by way of subsidy between the rate actually chargeable under the House Building Advance Scheme framed by the third respondent company and the actual interest paid to the HDFC, from the house building loan arranged by the third respondent company for the petitioners. 2. According to the petitioners, they are all permanent employees of the Bharat Heavy Electricals Ltd. The said company has got House Building Advance (H.B.A.) Scheme for purchase of house or flat. Every employee who has not less than 5 years of continuous service is entitled to avail this house building advance. The interest to be charged on the loan is at the rate at which the Government charges for such class of loans. Option is given to the employee to approach LIC/HDFC to raise loan, in which case the company will grant subsidy to the employee to meet the difference in the company and the LIC/HDFC rate of interest. Such option is left to the concerned employee. The petitioners have availed house building advance loan, and they are bound to pay the interest to the company at the rate which the company is charging for house building advance. The third respondent company due to lack of funds for granting the advance under the scheme has asked the employees to approach and avail the loan from LIC/HDFC. The employee is liable to pay a sum of Rs. 528 per month by way of interest but really he pays Rs. 1, 357 from this salary every month to HDFC/LIC. Thus, the company subsides every month the payment of interest to the extent of Rs. 528. It is the obligation of the company to provide house building advance under prescribed rate of interest and it is not the obligation of the employee to pay higher rate of interest than prescribed rate of interest under H.B.A. Scheme. Thus, the company subsides every month the payment of interest to the extent of Rs. 528. It is the obligation of the company to provide house building advance under prescribed rate of interest and it is not the obligation of the employee to pay higher rate of interest than prescribed rate of interest under H.B.A. Scheme. At the time of payment of salary to the petitioners the company deducts the amount equivalent to the instalment along with the interest calculated at the company rate, as prescribed under the H.B.A. Scheme. By the impugned circular issued by the Deputy Manager/Finance of the third respondent, Ranipet, it is made clear that payment of interest subsidy either to the employees or paid to the agencies on their behalf is a taxable perquisite under s. 17(4) [sic - 17(2)(iv)] of the IT Act and tax is to be recovered on such amount as per the provisions of the Act. This circular is said to have been passed after due consideration with the CIT and the concerned ITO. The petitioners have no other alternative appropriate forum to seek redressal of their grievance as tax is likely to be deducted at source on the amount of interest subsidy paid directly by the company to the HDFC in regard to the loan available by the petitioners under the H.B.A. Scheme. The said subsidy is not a 'perquisite' within the meaning of s. 17(2)(iv) of the IT Act, 1961, and such deduction is wholly without jurisdiction. 3. The contesting respondent, namely, Bharat Heavy Electricals Ltd./third respondent has not filed any counter-affidavit. 4. In the light of the above factual position, I have heard the learned counsel for the petitioner as well as respondents. 5. Mrs. Reeta Chandrasekar, learned counsel appearing for the petitioner, after taking me through the House Building Advance Scheme as well as relevant provisions of the IT Act, has contended that the subsidy granted by the third respondent company is not a perquisite within the meaning of s. 17(2)(iv) of the IT Act. 5. Mrs. Reeta Chandrasekar, learned counsel appearing for the petitioner, after taking me through the House Building Advance Scheme as well as relevant provisions of the IT Act, has contended that the subsidy granted by the third respondent company is not a perquisite within the meaning of s. 17(2)(iv) of the IT Act. She also contended that even otherwise there is no obligation cast on the petitioners to avail loan from HDFC and pay such higher rate prescribed under the House Building Advance Scheme and hence any subsidy by way of interest paid by the company to HDFC between the rate chargeable for the housing loan under the HBA Scheme and the rate actually paid to the HDFC is not in discharge of any obligation on the part of the employees within the meaning of s. 17(2)(iv) of the IT Act. None appeared for the third respondent company. However, Mr. S. V. Subramanian, learned senior counsel for Income-tax (respondents 1 and 2) by placing the relevant provisions of ss. 17(2)(iv), 192, 199, 200 and 203, has contended that the impugned circular issued by the third respondent is in accordance with the statutory provisions and no prejudice has been caused to the employees by deducting tax at source. In other words, according to him, the third respondent has only performed the statutory obligation. 6. I have carefully considered the rival submissions. There is no dispute that the third respondent company is having a scheme called House Building Advance Scheme for purchase of house or flat, that said scheme is intended only for the employees of the third respondent company and several employees who had completed 5 years of continuous service are entitled to avail the said HBA Scheme. No doubt, if the company itself provides the entire amount for the purchase of house or flat, the rate of interest is lesser compared to the interest rate in respect of the loans being sanctioned by LIC/HDFC. No doubt, if the company itself provides the entire amount for the purchase of house or flat, the rate of interest is lesser compared to the interest rate in respect of the loans being sanctioned by LIC/HDFC. However, if any employee prefers to approach LIC/HDFC to raise loan, the third respondent company will grant subsidy to the employee to meet the difference in the Company and LIC/HDFC rate of interestIt is contended that since the company has to provide the said facility and there is no obligation on the part of the employees to avail loan from the LIC or HDFC and whatever subsidy the company gives, the same cannot be deducted from the gross income of the employees concerned. 7. The relevant provision under the IT Act, 1961, is s. 17. Sec. 17(1) speaks about salary. As per s. 17(1)(iv), any perquisites provided/paid to the employee would amount to salary. Sec. 17(2) speaks about perquisite. As per s. 17(2)(iv), perquisite includes any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee. 8. On a perusal of the scheme of the third respondent company as well as the relevant provisions of the IT Act referred to above, it is clear that payment of interest subsidy either to the employees or paid to the agencies like LIC/HDFC on their behalf is a taxable perquisite under s. 17(2)(iv) of the IT Act. The tax is to be recovered on such amount as per the said Act. In other words, the payment of interest to other financial institutions on behalf of the employees by the employer is a taxable perquisite; accordingly such payment of interest is not exempted under s. 10 of the IT Act. In such circumstance, the contention of the petitioners that the same cannot be deducted from the gross income of the employees concerned cannot be accepted. Hence the impugned circular issued by the third respondent company is in accordance with the statutory provisions of the IT Act referred to above and I am unable to accept the argument of the learned counsel for the petitioners. 9. Net result, the writ petition fails and the same is dismissed. No costs.