Uniform gratuity exemption limit upheld where no unequal treatment of similarly placed employees was shown.

Section 10(10)(iii) of the Income-tax Act, 1961, was examined for alleged discrimination under Article 14 because it limits gratuity exemption to 15 days' wages for each completed year of service. The text notes that the exemption applies uniformly to gratuity under schemes outside section 10(10)(i) and section 10(10)(ii), and that the statutory gratuity rate under the Payment of Gratuity Act is itself based on 15 days' wages per completed year. As the record did not show that the affected employees were similarly situated to those under the other gratuity provisions, the provision was not shown to be arbitrary or discriminatory.

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Issues: Whether section 10(10)(iii) of the Income-tax Act, 1961, insofar as it limits exemption for gratuity to 15 days' wages for every year of completed service, is discriminatory and violative of Article 14 of the Constitution of India.

Analysis: The challenge was examined on the basis that the petitioners' gratuity scheme differed from the statutory gratuity under the Payment of Gratuity Act, 1972. The exemption under section 10(10)(iii) applies uniformly to gratuity payable under schemes not covered by section 10(10)(i) or section 10(10)(ii), and the statutory rate under section 4 of the Payment of Gratuity Act is itself 15 days' wages for every year of completed service. The record did not establish that employees governed by the provision were similarly situated to those covered by the other gratuity provisions so as to attract Article 14 discrimination.

Conclusion: The provision was not shown to be discriminatory or violative of Article 14, and the challenge failed.

Ratio Decidendi: A uniform statutory limit on gratuity exemption does not offend Article 14 unless persons placed in the same legal position are shown to be treated unequally without a rational basis.

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