WP/23629/2001 of B. Kishan Yadav, S/o B.Hanumantha Rao Yadav Vs The Honble Chief Commissioner, Income Tax, A.P. on 21 December 2004

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD

(Special Original Jurisdiction)

TUESDAY, THE TWENTY FIRST DAY OF DECEMBERTWO THOUSAND AND FOUR

PRESENT

THE HON'BLE MR JUSTICE BILAL NAZKI

and THE HON'BLE MR JUSTICE S.ANANDA REDDY

WRIT PETITION NO : 23629 of 2001

Between:

1 B. Kishan Yadav, S/o B.Hanumantha Rao Yadav R/o.1-2-471/1, domalguda,Hyderabad - 29. 2 D. Nagabhushan Reddy, S/o.D.Chenna Reddy, Plot No.32, Vidyanagar,Hyderabad - 44. 3 L.P.V.S.Nageswara Rao, s/o L/ Bhramham C/o.Late T.Lakshmipathi, 5-9,Sangeetha nagar, Kukatpally (V), Hyderabad - 72.4 T. Ashok S/o T.Narasimha Plot No. 71&72, H.No.17-76/2, RaghavendraColony, Uppal, Hyderabad - 37.5 Jinka Nagaraju S/o.J.Narayana Swamy R/o.3-6-66A, Basheerbagh, Hyderabad. 6 R. Padmanabhan S/o.R.K. Rajagopalan 16-127/5, New Mirjalguda,Malkajgiri, Hyderabad - 47. 7 T. Suseela, D/o. D. Siddaiah, Basheerbagh, Hyderabad. 8 K. Venkataramana Rao, S/o. Durgaprasada Rao 1-1-750/3/C, JahavaharNagar, Gandhi Nagar, Bakara, Hyderabad - 209 M. Robins Paul, S/o. M. Paranjyoti, 1-2-606/2/7, Bandamahisamma Nagar,Indira Park, Hyderabad.

..... PETITIONER(S)

AND

1 The Hon'ble Chief Commissioner, Income Tax, A.P. Hyderabad.

2 The Income Tax Officer, Circle-4, (SALARIES) Ward-4(3) Shapur House,Hyderabad.3 The Managing Director , Indian Express, (MADHURAI) Ltd., ExpressPublications (M), Ltd., Express Estate, Mount Road Chennai. 4 The Branch manager, Indian Express, (MADHURAI) Ltd., Domalguda,Hyderabad - 29.Hyderabad.3 The Managing Director , Indian Express, (MADHURAI) Ltd., ExpressPublications (M), Ltd., Express Estate, Mount Road Chennai. 4 The Branch manager, Indian Express, (MADHURAI) Ltd., Domalguda,Hyderabad - 29.

5 Sundareshan, Chartered Accountant, 1-645, Basheerbagh, Hyderabad.

.....RESPONDENT(S)

Petition under Article 226 of the constitution of India praying that in thecircumstances stated in the Affidavit filed herein the High Court will be pleased toPetitioners , Sweepers, Attenders and Jr. Clerks herein, prays that this Hon'ble courtmay be pleased to call for the records along with the representations of thepetitioners from the respondents to declare the action of respondents in TaxDeducted at Sourceon126383,126385,129209,220257,129214,127080,129213,126384&220256is quite illegal, arbitrary, unethical and consequently quash the same and issue aWrit, Order or direction more particularly one in the nature of Writ or Certiorari,directing the respondents to refund the TDS amount of Rs.2,67,396/- with interestfrom the date of illegal deduction to till the date of realisation and pass Counsel for the Petitioners: MR.B.BHASKARA REDDY

Counsel for the Respondent Nos.1 and 2: MR.S.R.ASHOK (SC FOR INCOMETAX)

Counsel for the respondents 3 and 4: Mr. S.Ravindranath, The Court made the following :

HON’BLE MR. JUSTICE BILAL NAZKI

AND

HON’BLE MR. JUSTICE S. ANANDA REDDY

W.P.No. 23629 of 2001

ORDER: (Per Hon’ble Mr. Justice Bilal Nazki)

This writ petition has been filed by 9 petitioners seeking refundof the amounts deducted at source amounting to Rs.2,67,396/- along with interest as it was deducted illegally.

The case of the petitioners is that they were in regular service of4[th] respondent, branch office at Hyderabad. The 4[th] respondentintroduced a voluntary retirement scheme in the year 1995-96 toreduce the strength of employees. The scheme, according to thepetitioners, was not even voluntary, but was a compulsory retirementscheme because they were threatened that if they did not opt forretirement, they could be transferred to any other branches in thecountry or their services could be terminated. Under thesecircumstances, they were compelled to accept the scheme and retire.The 4[th] respondent management agreed to pay Rs.1.5 lakhs or Rs.Two lakhs to such employees who seek retirement basing on theirseniority. At the time of retirement, the employer deducted income taxwrongly from out of the amounts payable to the petitioners under theprovisions of the Income Tax Act (hereinafter referred to as “the Act”),although they were compelled to retire from service. It is submittedthat the deduction of TDS amounts was illegal as none of thepetitioners received an amount exceeding Rs.5.00 lakhs. 60employees filed an appeal before the Commissioner of Income-Tax,Hyderabad. The petitioners also filed Form No. 2A returns before theDeputy Commissioner of Income Tax. 30 employees of the samebatch received TDS amounts with interest through 2[nd] respondent inthe assessment year 1997-98. Remaining 30 employees failed to getrefund of TDS amounts. Representation were also sent to the 3[rd]respondent on 28.5.1999 and 16.6.1999 to get the approval from the1[st] respondent for exemption of income tax under Section 10 (10C) ofthe Act, but they did not give any response.

2[nd] respondent filed counter in which it is contended that at thetime of retirement, the petitioners were not exempted from tax interms of Section 10 (10C) of the Act. According to Section 10 (10C) ofthe Act, as it stood at the relevant point of time, the exemption wouldonly be available after the employer had obtained an approval of thescheme of voluntary retirement from Chief Commissioner of Income Tax. Since the employer had failed to obtain an approval from theChief Commissioner of Income Tax, therefore there was no questionof granting exemption. Sub-section (10C) of Section 10 of the Act asit stood at the relevant point of time reads as under, “(10C) any amount received by an employee of a publicsector company or of any other company at the time of hisvoluntary retirement in accordance with any scheme or schemesof voluntary retirement:

Provided that the schemes of the said companies governingthe payment of such amount are framed in accordance with suchguidelines as may be prescribed for the public sector companiesor for other companies and such guidelines may, inter alia,include criteria of economic viability and such schemes in relationto companies (other than public sector companies) are approvedby the Chief Commissioner or, as the case may be, Director-General in this behalf;”

When the case came up on earlier occasion and when it waspointed out by the 2[nd] respondent that since the employer failed toget approval of the Chief Commissioner of Income Tax, therefore thepetitioners are not entitled to any refund and were not exempted fromtax, we directed the 3[rd] respondent to file counter affidavit as they didnot appear in the case on 1.7.2004. Accordingly counter affidavit wasfiled by respondents 3 and 4. It is submitted in the counter affidavitthat the petitioners 1, 6 and 7 were Attenders/Sweepers, petitioners 2and 3 were Junior Clerks, petitioner No.4 was Assistant Editor,Petitioners 5 and 8 were Sub-Editors and petitioner No.9 was a KeyBoard Operator. It was further submitted that the management put upa notice on 12.8.1995 explaining the terms and conditions of thescheme and called for options from the individual employees. Themain object of introducing the scheme was to advance computertechnology. No restrictions on age and service were imposed.However, it is denied that the petitioners were compelled to opt for thevoluntary retirement scheme and forced to apply for the same underthe threat of transfer of the employees any where in India. The petitioners along with 44 other employees opted for voluntaryretirement. It is further submitted that the respondents have notreceived or located the representations made allegedly by thepetitioners on 28.5.1999 and 16.6.1999. It is contended that Section10 (10C) of the Act stipulates certain conditions to obtain exemptionfrom deducting the TDS for those who opted for voluntary retirementfrom service. It is further contended that the guidelines are laid downfor the purpose of Section 10 (10C) of the Act in rule 2BA of theIncome Tax Rules 1962 and the exemption would be available underthe guidelines only to those persons who had completed 10 years ofservice or completed 40 years of age. There are other guidelines laiddown. Since the petitioners had not fulfilled any requirement of age orservice, therefore no approval was obtained. The respondents havealso given the particulars of the petitioners and submitted that none ofthem would fall within the scheme.

We have seen the record. Mr. T.Ashok (petitioner No.4), Asst.Editor was 46 years of age and had service of 8 years and 2 months.Mr. M. Robin Paul (petitioner No.9), Key Board Operator was 40years of age and had service of 13 years and 5 months. Therefore ifthe scheme had been sent for approval, at least these two petitionerswould have got the benefit of exemption. The respondents-IncomeTax Department was right in not granting the exemption and notrefunding the TDS amount because the scheme had not beenapproved by the Chief Commissioner of Income Tax. We are sure ifthe employer had gone to the Chief Commissioner of Income Tax forapproval of the scheme, the two persons mentioned hereinaboveviz., petitioners 4 and 9 would have got the benefit. Therefore it wasbecause of the employer that these two persons were made to paythe tax by way of deduction at source which they could have saved.A similar view was taken by the Delhi High Court reported in Jodhraj .Singh Vs. Union of India and others In these circumstances, we allow the writ petition to the extentof the petitioners 4 and 9 and in peculiar circumstances of the case,direct the employer i.e., respondents 3 and 4 to refund the tax to the

Conclusion

petitioners 4 and 9 which was deducted at source at the time ofvoluntary retirement. They shall also give interest @ 6% P.A. Nocosts.

_______

BN J.

Dt.21.12.2004

KR

_______

SAR J.

That rule nisi has been made absolute to the extent indicated above.Witness the Hon’ble Sri Devinder Gupta, Chief Justice, on this theTUESDAY, THE TWENTY FIRST DAY OF DECEMBERTWO THOUSAND AND FOUR

Sd/-

ASST. REGISTRAR

To

The Hon'ble Chief Commissioner, Income Tax, A.P. Hyderabad.2 The Income Tax Officer, Circle-4, (SALARIES) Ward-4(3) Shapur House,Hyderabad.2 The Income Tax Officer, Circle-4, (SALARIES) Ward-4(3) Shapur House,Hyderabad.

3 The Managing Director , Indian Express, (MADHURAI) Ltd., ExpressPublications (M), Ltd., Express Estate, Mount Road Chennai. Publications (M), Ltd., Express Estate, Mount Road Chennai.

4 The Branch manager, Indian Express, (MADHURAI) Ltd., Domalguda,Hyderabad - 29.Hyderabad - 29.

5 Sundareshan, Chartered Accountant, 1-645, Basheerbagh, Hyderabad.

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