JODHRAJ SINGH Vs. UNION OF INDIA

JUDGEMENT

(1.) THE appellant has preferred this letters patent appeal against the judgment and order dt. 15th Oct., 1996, by which the learned single judge dismissed Civil Writ Petition No. 820 of 1995, filed by the appellant, seeking a mandamus to the respondents for release of Rs. 84,000 deducted as income -tax from the amount paid to the appellant under the voluntary retirement scheme.

(2.) THE facts relevant for the purposes of this appeal may be briefly noted : (i) The appellant was employed with the Tata Iron and Steel Co. (hereinafter referred to as "TISCO") at Jamshedpur. He took voluntary retirement on 25th July, 1992, under a voluntary retirement scheme. The appellant's request for voluntary retirement was accepted by TISCO on 23rd July, 1992, to be effective from the afternoon of 25th July, 1992. The appellant received Rs.

(3.) ,14,336.70 as retiral benefits under the scheme, but after deduction of Rs. 84,000 as income -tax. (ii) The appellant claimed that the amounts payable to him under the voluntary retirement scheme were exempt from income -tax and, hence, the amount of Rs. 84,000 was not liable to be deducted. He relied on S. 10(10C) of the IT Act, 1961, which was added by the Finance Act of 1992, whereby income -tax exemption was given up to Rs. 5,00,000 for amounts payable under the approved voluntary retirement scheme. (iii) The appellant had sought refund of Rs. 84,000 from the respondents. The respondents declined the request of the appellant and contended that income -tax was liable to be deducted as the appellant was not entitled to exemption from income -tax under the voluntary retirement scheme under which the appellant retired. The learned single judge dismissed the writ petition filed by the appellant, holding that the essential requirement under S. 10(10C), of the scheme being an approved one, was not satisfied and, hence, the benefit of exemption from payment of income -tax could not be availed of. 3. It would be worthwhile at this stage to reproduce S. 10(10C) of the IT Act, 1961 : Sec. 10(10C) : "any amount received by an employee of : (i) a public sector company; or (ii) any other company; or (iii) an authority established under a Central, State or Provincial Act; or (iv) a local authority; or (v) a co -operative society; or (vi) a University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under S. 3 of the University Grants Commission Act, 1956 (3 of 1956); or (vii) an Indian Institution of Technology within the meaning of cl. (g) of S. 3 of the Institutes of Technology Act, 1961 (59 of 1961); or (viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf, at the time of his voluntary retirement, in accordance with any scheme or schemes of voluntary retirement, to the extent such amount does not exceed five lakhs rupees : Provided that the scheme of the said companies or authorities or societies or universities or the institutes referred to in sub -cls. (vii) and (viii), as the case may be, governing the payment of such amount are framed in accordance with such guidelines (including, inter alia, criteria of economic viability) as may be prescribed and such schemes in relation to companies referred to in sub -cl. (ii) or co -operative societies referred to in sub -cl. (v) are approved by the Chief CIT or, as the case may be, Director -General in this behalf : Provided further that where exemption has been allowed to an employee under this clause for any assessment year, no exemption thereunder shall be allowed to him in relation to any other assessment year;" It would be seen that in terms of the S. 10(10C) the amount received by an employee on voluntary retirement from a public sector company up to a sum of Rs. 5 lakhs, would be exempt from income -tax, subject to the said amount being paid under an approved voluntary retirement scheme.