Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2020 (12) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 134 - MADRAS HIGH COURTExemption u/s 10(10) - Total Sum received in excess of amount specified in Section 4(3) of the Payment of Gratuity Act. - Refund of income tax as deducted at source (TDS) on the gratuity paid to the Petitioner - Enhanced limit for Central government employees versus for employees of PSUs HELD THAT:- In this case, it is expressly stated that the amendment to Section 4(3) of the Payment of Gratuity Act would take effect from 29.03.2018. As a corollary, the increased exemption limit in the Income Tax Act is made applicable only to persons who retire on or after 29.03.2018. In the absence of a challenge to Section 10(10) of the Income Tax Act, in our view, the relief prayed for cannot be granted. Extensive arguments were advanced to the effect that the stipulation of 29.03.2018 as the appointed date for the amendment to Section 4(3) is unconstitutional; therefore, the said contention is examined. The said amendment applies in respect of receipt of gratuity under the Payment of Gratuity Act. As between recipients of gratuity under the Payment of Gratuity Act, there is no discrimination as regards the date of entry into force of the increased ceiling. The party-in-person alleges that the impugned notifications are discriminatory on the basis that Central Government employees and employees of public sector undertakings should be treated on a par. In our view, this contention cannot be countenanced. The terms and conditions of employment vary significantly as between employees of the Central Government and those of public sector undertakings and, indeed, even as between different public sector undertakings. Therefore, these classes of employees do not constitute a single homogeneous class. Consequently, the contention that employees of public sector undertakings, such as the Petitioner, should be treated in the same manner as regards gratuity as the employees of the Central Government is rejected. Petitioner is seeking exemption from the payment of income tax. As per the settled legal position in this regard, an exemption provision or exemption notification is required to be construed strictly and ambiguity, especially as regards applicability, is required to be resolved in favour of the revenue. Section 10(10)(ii) of the Income Tax Act exempts amounts received as gratuity from the income of the assessee to the extent specified in Section 4 (3) of the Payment of Gratuity Act. The undoubted position is that Section 4(3) of the Payment of Gratuity Act specified the limit of ₹ 10 lakhs as on the date of retirement of the Petitioner. This limit was increased to ₹ 20 lakhs by an amendment which admittedly came into force only on 29.03.2018. As a corollary, the exemption limit was raised to ₹ 20 lakhs by an amendment to the Income Tax Act only in respect of persons who retired or died on or after 29.03.2018. Upon perusal of the amendment notifications, we find that the Petitioner has completely failed to make out a case that the amendments should be implemented with retrospective effect from 01.01.2016. In our view, the judgment of the Hon'ble Supreme Court in D.S.Nakara case [1982 (12) TMI 151 - SUPREME COURT] does not come to the aid of the Petitioner inasmuch as the said judgment dealt with a cut-off date with regard to the payment of pension. In this case, we are concerned with the date of entry into force of an amendment to the Payment of Gratuity Act. The said amendment is pursuant to an Act of Parliament which admittedly entered into force only on 29.03.2018. As such, the endeavour by the Petitioner to enforce the said amendment from 01.01.2016 is liable to be rejected.
|