GOPALAKRISHNAN K Vs. CENTRAL BOARD OF DIRECT TAXES

JUDGEMENT

(1.) THE petitioner prays for issue of a writ of declaration declaring that section 10(10) and section 10(10AA) of the Income-tax Act, 1961, as relating to any other gratuities received by the employees of statutory corporations and employees in the private sector, who are not covered by the Payment of Gratuity Act, 1972, as null and void as the said provisions are discriminatory in law and is in gross violation of article 14 of the Constitution of India and also declaring the implausible clarification of the Central Board of Direct Taxes about the meaning of the term "salary" as used in section 10(10) and section 10(10AA) of the Income-tax Act, 1961, and their discordant interpretation as null and void and render justice with the apropos interpretation for the meaning of the term "salary" to be used in the above sections of the Income-tax Act.

(2.) THE petitioner retired from service in the Indian Airlines on superannuation at the close of work on January 31, 1991. He received the terminal benefits like gratuity and leave encashment. As per the regulations, the petitioner was entitled to the maximum amount of gratuity at 16 1/2 months of provident found pay (basic pay, variable dearness allowance, special compensatory allowance and additional pay) and similarly leave encashment calculated on provident fund pay last drawn. THE petitioner wrote a letter on September 26, 1990, to the Director, Finance, Indian Airlines, stating that the was entitled to get exemption from income-tax under section 10(10) of the income-tax Act in respect of the gratuity payment and under section 10(10AA) in respect of leave encashment on superannuation. He referred to a circular issued by the Central Board of Direct Taxes under Circular No. 46 F. No. 194/9/70 I. T. (AI), dated September 14, 1970. He claimed that the meaning of "salary" as defined under rule 2(h) of Part A of the Fourth Schedule to the Act should not be made applicable to the employees who were members of the Employees' Provident Fund Regulations. He prayed for issue of suitable instructions to all concerned as regards the components which are to be included under the head "Salary" for the purpose of computing income-tax exemption on gratuity payment and leave encashment in consultation with the competent authority in the office of the Central Board of Direct Taxes. He sent a letter on November 26, 1990, to the Secretary, Central Board of Direct Taxes, New Delhi, making the same claim and praying for issuing of guidelines by means of a circular, notification or in any other manner as regards the import of the expression "salary" used in section 10(10) and section 10(10AA) of the Income-tax Act.

(3.) HE invited our attention to anotHEr ruling of tHE Supreme Court in ITO v. N. Taking Roy Rymbai [1976] 103 ITR 82; AIR 1976 SC 670. That judgment, however, does not HElp tHE petitioner in any manner. THE court explained tHE ruling in Lawrence Singh's case [1968] 68 ITR 272 in tHE following manner (at page 87 of 103 ITR and at page 673 of AIR 1976 SC) :