KALYAN JYOTI SENGUPTA,J. - (1.) IN this petition voluntarily retired employees' association of the erstwhile employees of Steel Authority of India Limited and Durgapur Steel Plant have approached for the relief of exemption from paying any income -tax under Section 10(10C) of the Income -tax Act, 1961. Under the Scheme, according to the writ petitioner, they are fully exempted from paying income -tax but the concerned employer is systematically deducting taxes at source.
(2.) THE learned lawyer for the writ petitioner contends that the scheme under which the members of writ petitioner No. 1 voluntarily retired do come within the purview of Section 10(10C) of the Income -tax Act, 1961, read with Rule 2BA of the Income -tax Rules, 1962. He contends that though the monetary benefits given in terms of the voluntary retirement scheme are being paid quarterly in a year spreading over each and every month in equal proportion. So it was not open for respondent Nos. 2 and 3 to deduct income -tax at source for payment to the Income -tax Department. He has taken me through various terms and conditions of voluntary retirement scheme. According to him, all the eligibility criteria to get exemption are fulfilled. Therefore, whatever amounts have already been deducted should be refunded and the future deduction shall be prohibited. Mr. Tapas Kumar Bandopadhyay, learned lawyer appearing for the Steel Authority of India, contends that if the scheme for voluntary retirement is read properly then it would appear that it is not a scheme within Rule 2BA of the Income -tax Rules, 1962. He draws my attention to Clause 4(1) and submits that the scheme of payment and the mode thereof is nothing short of payment of salary month by month and every month. It is actually payment of deferred monthly salary. Moreover, in terms of Clause 7 the employer concerned is subjected to payment of usual taxes. This has to be read along with another circular dated May 25, 1998. It is the obligation of the employer to deduct income -tax at source so it has deducted.
(3.) THE learned lawyer for respondent No. 5 contends that the Steel Authority is justified in deducting tax at source and he contends that payment of benefit under the voluntary retirement scheme is nothing but payment of monthly salary, if not then it should be treated to be profit from income. In support of his submission, he relies on a decision of the Madras High Court in P. Arunachalam v. CIT : [2000]241ITR827(Mad) .;