Tax deduction on salary arrears transferred to pension corpus challenged, petitioners granted liberty to seek rate determination

The Madras HC disposed of writ petitions challenging the constitutionality of tax deduction provisions on salary arrears transferred to pension corpus. The court found the issues identical to a previous 2019 decision and incorporated those findings. Petitioners were granted liberty to request determination of tax deduction rates within four weeks, with authorities required to decide representations within six weeks. The interim injunction was extended until April 15, 2025, or disposal of representations, whichever is earlier. A related petition concerning house rent allowance from a bipartite settlement received identical directions.

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Issues:
- Tax deduction from salary arrears for transfer to pension corpus
- Constitutionality of Explanation to Section 17(2)(ii)(c) of the Income Tax Act 1961
- Double taxation issue
- Application of Section 197 for deduction at nil/lower rate
- Extension of interim injunction on tax deduction

Analysis:
1. The judgment addresses eight writ petitions filed by various bank associations concerning tax deduction from salary arrears meant for transfer to pension corpus. The petitions seek declarations or mandamus due to grievances over tax deductions. One petition specifically challenges the constitutionality of certain sections of the Income Tax Act 1961 and related circulars.

2. The court refers to a previous case involving the Indian Overseas Bank Employees' Union, where a similar issue was raised regarding pension regulations and tax deductions. The court emphasizes the legality of tax deductions and the availability of mechanisms under the Income Tax Act, such as Section 197, for applying for lower or nil deduction certificates.

3. The judgment highlights the importance of following the statutory provisions and advises petitioners to seek relief through appropriate authorities for lower tax deductions. The court grants time for the petitioners to make their requests and ensures a timely decision within six weeks of receiving representations.

4. An interim injunction, initially granted in 2011, restraining banks from tax deductions is extended until the disposal of the representations or a specified date. The court maintains consistency in its approach across the writ petitions, emphasizing the need for petitioners to follow due process under the law.

5. The judgment concludes by disposing of the writ petitions based on the orders outlined, with no costs imposed. The legal representatives for the petitioners and respondents are identified, and the court ensures that the liberty granted in previous orders extends to the current petitioners as well.

6. Overall, the judgment provides a detailed analysis of the tax deduction issue, the application of relevant legal provisions, and the extension of interim relief, ensuring clarity and guidance for the petitioners in seeking redressal through proper channels.

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