D.K. Seth,J. - (1.) In this case the petitioner-appellants were subjected to voluntary retirement pursuant to a voluntary retirement scheme (scheme) by the employer-respondent. The scheme appears at p. 21 of the paper book (Annexure "B" to the writ petition). The respondent authority had been deducting tax at source under the provisions of Section 192 of the IT Act, 1961. This seems to have been clarified by the employer through Annexure, "C" at p. 24 of the paper book. This has since been challenged by the employees' association, the petitioners/appellants, as not chargeable to tax in view of Clause (10C) of Section 10 of the IT Act.
(2.) According to Mr. Bagchi, learned counsel for the appellants, the amount received under the scheme is an amount referred to in Section 10(10C) and became due and payable at the time when the voluntary retirement under the scheme took place and chargeable to tax under Section 15, Clause (a), of the said Act, whether paid or not. If the payment is spread over, for a period, according to the scheme, it would not be chargeable to tax bereft of Clause (10C) of Section 10 because of its payment even at subsequent assessment years than the assessment year for which it had become due, but not paid. He has referred to Section 43(2) of the said Act and pointed out that the word 'paid' includes incurring of the liability to pay. He further contends that the scheme under which the voluntary retirement had taken place is in commensurate with the scheme provided in Rule 2BA of the IT Rules, 1962. There is no conflict or friction in between the said rule and the scheme formulated. As such to the extent of rupees five lacs the employees opted under the scheme are entitled to exemption of tax in terms of Section 10(10C). Therefore, the amount paid under the scheme represents the amount contemplated under Clause (10C) and assumes the character of salary or benefit in lieu of salary as defined in Section 17, Sub-sections (1) and (3), respectively, and are chargeable under Section 15, Clause (a), as soon it was due though not paid and as such, liable to be exempted under Section 10(10C). He has led us through different clauses in order to point out that there is no conflict in between the scheme and Rule 2BA of IT Rules.
(3.) Mr. Tapas Banerjee, learned counsel for Steel Authority of India Ltd. (SAIL), has pointed out that the scheme is in conflict with Rule 2BA on two grounds. Firstly, it includes gratuity, leave pay and half pay leave, etc., which is something different from the amount receivable under the scheme and are salary or benefit in lieu of salary, as defined in Sections 17(1) and (3), respectively. Therefore, the amount received under the scheme does not qualify for exemption under Section 10(10C). The second ground he has pointed out that it contemplates prohibition of re-employment in any of the units or subsidiaries or joint ventures of SAIL. Whereas Clause (v) of Rule 2BA contemplates re-employment in any other company which necessarily means that it is not confined to the units or subsidiaries of SAIL, but to any other company. Therefore, according to him, the scheme is not in accordance with the scheme as contemplated under Section 10(10C) r/w Rule 2BA. Therefore, no benefit of Section 10(10C) could be availed of in this case. He has then, contended that the circular at p. 24 of the paper book, which is Annexure "C" to the writ petition, modified the scheme to the extent that the optees for voluntary retirement shall be liable to pay income-tax like employees in services. Since the employees themselves have opted with their eyes open with the modification in the scheme they are estopped from claiming any benefit under Section 10(10C). He contends that Section 192 of the IT Act casts a liability on the respondent. Therefore, they had rightly deducted the tax at source. He has also hinted at the second proviso to Section 10(10C) and contended that since such benefit, if available by stretching the meaning, even then the benefit can be allowed for one assessment year, it cannot be allowed for any subsequent assessment years.;