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2021 (8) TMI 678 - SC - Income TaxScope of amendment of the Gratuity Act - Applicability of Payment of Gratuity (Amendment) Act, 2010 from 1.1.2007 - Government of India approved enhancement of gratuity to the executives and Non-Unionized Supervisors of Central Sector Enterprises such as the Coal India Limited where the appellants were employed - ceiling of the gratuity was raised to ₹ 10 lakhs w.e.f. 1.1.2007 in terms of office memorandum of Government of India dated 26.11.2008 - grievance of the appellants is that the tax has been deducted at source when the gratuity was paid to the appellants before the commencement of the Amending Act - order passed by the High Court of Jharkhand whereby the claim of the appellants to declare the applicability of Payment of Gratuity (Amendment) Act, 2010 from 1.1.2007 was declined - HELD THAT:- What is exempt from the Income Tax Act is the amount of gratuity received under the Gratuity Act to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of Section 4 of the Gratuity Act. The Gratuity Act contemplated rupees ten lakhs as the amount of gratuity only from 24.5.2010. Such gratuity is the amount payable only once. Thus, the cut-off date cannot be said to be illegal, it being one-time payment. Therefore, such amendment in the Gratuity Act cannot be treated to be retrospective. Therefore, the provisions of the statute cannot be said to be retrospective In a recent judgment reported as Himachal Road Transport Corporation & Anr. v. Himachal Road Transport Corporation Retired Employees Union [2021 (2) TMI 1190 - SUPREME COURT] in the case of payment of increased quantum of death-cum-retirement gratuity, it was held that the cutoff date cannot be said to be arbitrary which was fixed keeping in view financial constraints Thus we find that the date of commencement fixed by the Executive in exercise of power delegated by the Amending Act cannot be treated to be retrospective as the benefit of higher gratuity is one-time available to the employees only after the commencement of the Amending Act. The benefit paid to the appellants under the office memorandum is not entitled to exemption in view of specific language of Section 10(10)(ii) of the Income Tax Act. No error in the order passed by the High Court.
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