KRISHNA GOPAL TIWARY & ANR. versus UNION OF INDIA & ORS.

Citation: [2021] 8 S.C.R. 422 · Decided: 13-08-2021 · Supreme Court of India · Bench: HEMANT GUPTA · Disposal: Dismissed
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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 8 S.C.R.
KRISHNA GOPAL TIWARY & ANR.
v.
UNION OF INDIA & ORS.
(Civil Appeal No.  4744 of 2021)
AUGUST 13, 2021
[HEMANT GUPTA AND A. S. BOPANNA, JJ.]
Income Tax Act, 1961: s.10(10)(ii) – Exemption  – Appellants
are employees of Coal India Ltd. – In terms of Office Memorandum
of Government of India dated 26.11.2008, the upper limit of gratuity
was increased to Rs.10 lakhs w.e.f 01.01.2007  – Payment of such
gratuity was made to appellants in terms of Office Memorandum –
However, later on Payment of Gratuity Act was amended which
received assent of President on 17.05.2010 – In terms of Amending
Act, a notification issued by Government of India on 24.05.2010
appointing the said date as the date on which the Amending Act
came into force – Case of appellant was that the tax was deducted
at source when the gratuity was paid to the appellants before the
commencement of the Amending Act – Appellants thus challenged
the date of commencement as 24.05.2010 but asserted that it should
be made effective from 01.01.2007 and consequently they would
not be liable for deduction of tax on the gratuity amount – Held:
Sub-section (5) of s.4 of the Gratuity Act protects the right of an
employee to receive better terms of gratuity under any award or
contract with the employer – The gratuity paid to the appellants on
the strength of Office Memorandum dated 26.11.2008 would fall in
the said sub-section – However, 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 s.4 of the Gratuity Act
– The Gratuity Act contemplated Rs.10 lakhs as the amount of
gratuity only from 24.05.2010 – 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 – The benefit paid to the
appellants under the Office Memorandum is not entitled to exemption
in view of specific language of s.10(10)(ii) of the Income Tax Act –
[2021] 8 S.C.R. 422
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Payment of Gratuity (Amendment) Act, 2010 – s.1(2) – Payment of
Gratuity, 1972 – s.4.
Dismissing the appeal, the Court
HELD: 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.
[Para 17][430-F-H]
Commissioner of Income Tax (Central)-I, New Delhi v.
Vatika Township Private Limited (2015) 1 SCC 1
: [2014] 12 SCR 1037; D. S. Nakara & Ors. v. Union
of India (1983) 1 SCC 305 : [1983] 2 SCR 165; State
Government Pensioners’ Association & Ors. v. State of
Andhra Pradesh (1986) 3 SCC 501 : [1986] 3 SCR
383; Union of India v. All India Services Pensioners’
Association & Anr. (1988) 2 SCC 580 : [1988] 2 SCR 
697; Sri Vijayalakshmi Rice Mills, New Contractors Co.
& Ors. v. State of Andhra Pradesh (1976) 3 SCC 37 :
[1976] 3 SCR 775; Orient Paper and Industries Ltd. &
Anr. v. State of Orissa & Ors. (1991) 1 Suppl. SCC 81 :
[1990] 2 Suppl. SCR 480; Himachal Road Transport
Corporation & Anr. v. Himachal Road Transport
Corporation Retired Employees Union (2021) 4 SCC
502 – referred to.
Case Law Reference
[2014] 12 SCR 1037
referred to
Para 7
[1983] 2 SCR 165
referred to
Para 8
[1986] 3 SCR 383
referred to
Para 10
[1988] 2 SCR 697
referred to
Para 11
[1976] 3 SCR 775
referred to
Para 14
[1990] 2 Suppl. SCR 480
referred to
Para 15
(2021) 4 SCC 502
referred to
Para 16
KRISHNA GOPAL TIWARY & ANR. v. UNION OF INDIA &
ORS.
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SUPREME COURT REPORTS
[2021] 8 S.C.R.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4744
of 2021.
From the Judgment and Order dated 27.07.2016 of the High Court
of Jharkhand at Ranchi in W.P. (S) No.1729 of 2016.
Arijit Prasad, Sr. Adv., Sanjay Kumar Visen, Bhanwar Jadon,
Ms. Adira A. Nair, Advs. for the Appellants.
Vikramjit Banerjee, ASG, M. P. Gupta, Bhakti Vardhan Singh,
Mohan Prasad Gupta, P. S. Sudhir, Ms. Priyanka Das, Amrish Kumar,
Vaibhav Agnihotri, Ms. Supriya Juneja, Advs. for the Respondents.
The Judgment of the Court was delivered by
HEMANT GUPTA, J.
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