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2023 (8) TMI 90 - MADRAS HIGH COURTExemption u/s 10 (10C) - Settlement of dues receipt in terms of voluntary retirement - second respondent made application under the voluntary retirement scheme opting to leave the service of the petitioner Company, as accepted, after deducting TDS he was paid a sum as full and final settlement of his dues - as argued petitioner company illegally deducted the wages of the second respondent in terms of income tax as wages due to the period of work done by the employees would be in an ambit of Section 33 (c ) (2) of ID Act and under VRS the amount payable to the workman will be exempted Rs. 5,00,000/- from the income tax as per Income Tax Act, So the management have illegally deducted a sum from his retirement benefits. HELD THAT:- As on perusal of clause 10(C) of Section 10 of Income Tax Act, revealed that payments on account of voluntary retirement are to be exempted from income tax only if the schemes governing the said payments are in accordance with the guidelines prescribed in this behalf - As petitioner would submit that the scheme floated by the petitioner Company is not by any law. Since it was only contract between the petitioner and the second respondent and he was allowed to retire on voluntary retirement scheme. Therefore, Section 10(C) of the said Act is not at all applicable to the second respondent. However, the petitioner failed to produce any receipt or challan in respect of the payment as deducted from terminal benefits of the second respondent before the Income Tax Department. Admittedly, the second respondent was voluntarily retired from his service. Therefore, as per Income Tax Act, the person who had retired from service on voluntary retirement scheme, his income upto Rs. 5,00,000/- on retirement have to be exempted from income tax. Therefore, the first respondent rightly directed the petitioner to pay a sum to the second respondent. Hence, this Court finds no infirmity or illegality in the order passed by the first respondent. Accordingly, this writ petition is dismissed. It is made clear that the petitioner is directed to pay the remaining amount after deducting the amount which was already deposited on the file of the first respondent within a period of four weeks from today.
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