TaxTMI 
TaxTMI 
2024 (10) TMI 412
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....entitlement of these four assessees' in claiming sec.10(10A) and 10(10AA) of the Income Tax Act, 1961 (in short "the Act") exemptions; as the case may be regarding their entitlement benefits of leave encashment etc. Needless to say, sec.10(10A) grants exemption to pensionary benefits (including gratuity) whereas sec.10(10AA) applies in case of leave encashment; wherein, the employee is of the "Central Government" or a "State Government" as the case may be followed by the prescribed quantum of the retiral benefits; as the case may be. A few key facts may be noticed hereunder. 3. There is hardly any dispute between the parties that all these four assessees had joined the erstwhile Maharashtra State Electricity Board, [in different capacities], way back in 1980's. They have admittedly superannuated in the impugned assessment years herein. They have received their impugned retiral benefits i.e., gratuity(ies) and leave encashment(s) involving varying sums. These four assessees claimed exemption(s) u/sec. 10(10A) and u/sec.10(10AA) regarding the same. Needless to say, the learned lower authorities are of the view that since these assessees' have superannuated from the Maharashtra ....
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....re as follows. The admitted facts are that the TNAU is a University that is constituted under a State Act. The petitioners herein are employees of the University. Chapter VII of the Tamil Nadu Agricultural University Act, 1971 (in short 'TNAU Act') sets out the conditions of service of employees, section 34 deals with pension, gratuity and other benefits and section 35 deals with conditions of service. 13. Section 35 states that subject to the provisions of the TNAU Act, the appointment, procedure for selection, pay and allowances and other conditions of service of the officers, teachers and other employees shall be 25 prescribed. Chapter XII of the Tamil Nadu Agricultural University Rules (in short 'TNAU Rules') deals with the grant of gratuity-cum-pension-cum-provident fund in the following terms: 2. GRATUITY-CUM-PENSION-CUM PROVIDENT FUND 1. The provisions of the Tamil Nadu Pension Code including the Tamil Nadu Liberalised Pension Rules, 1960 and Family Pension Rules, 1964 of the Tamil Nadu Government will apply mutatis mutandis to the employees of the Tamil Nadu Agricultural University in regard to the payment of gratuity and pension o....
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....ish such statements, accounts, reports and other particulars relating to any grant made by the Government and its utilization, as the Government may require. The other sources of funds are set out under section 29 and read as follows: 29. Other funds: The University may have such other funds as may be prescribed by the statutes. 17. Thus, and undisputedly, the management of the University is conducted fully from and out of the income from fees, endowments, grants, donations and gifts and contributions/grants made by the Central Government, any State Government, University Grants Commission, any local authority or any Corporation owned or controlled by the Government. The manner of investment of funds is also set out categorically in the provision itself. 18. In all, the position that obtains is that the Tamil Nadu Agricultural University is a part of the State and none of the parties before me would dispute the position that in the event of any action of the University coming to be assailed under article 226 of the Constitution of India, such challenge would be fully maintainable. 19. Compare and contrast this with other institu....
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....on between the employees of the State and the Central Government on the one hand and the employees of PSU and Nationalised Banks on the other. In that case as well, the provision that was tested was section 10(10AA) of the Act as in the present case. 22. The challenge was repelled by the Division Bench, the Bench stating as follows : "5. So far as the challenge to provisions of section 10(10AA) of the Act on the ground of discrimination is concerned, we are of the view that there is no merit there in. This is for the reason that employees of the Central Government and State Government form a distinct class and the classification is reasonable having nexus with the object sought to be achieved. The Central Government and State Government employees enjoy a 'status' and they are governed by different terms and conditions of the employment. Reference here may be made to the decision in Roshan Lal Tandon v. Union of India AIR 1967 SC 1889 wherein it was held by the Supreme Court that the legal position of a Government servant is more one of status than of Contract. The relevant extract from the said judgment reads as under: '6. We 0955 on to consid....
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.... "So we may find both contractual and status - obligations produced by the same transaction. The one transaction may result in the creation not only of obligations defined by the parties and so pertaining to the sphere of contract but also and concurrently of obligations defined by the law itself, and so pertaining to the sphere of status. A contract of service between employer and employee, while for the most part pertaining exclusively to the sphere of contract, pertains also to that of status so far as the law itself has seen fit to attach to this relation compulsory incidents, such as liability to pay compensation for accidents. The extent to which the law is content to leave matters within the domain of contract to be determined by the exercise of the autonomous authority of the parties themselves, or thinks fit to bring the matter within the sphere of status by authoritatively determining for itself the contents of the relationship, is a matter depending on considerations of public policy. In such contracts as those of service the tendency in modern times is to withdraw the matter more and more from the domain of contract into that of status. "(Salmond and Will....
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....yareLal Sharma . Managing Director (1989) 3 SCC 448), Since employees of government companies are not government servants, they have absolutely no legal right to claim that the Government should pay their salary or that the additional expenditure incurred on account of revision of their pay scale should be met by the Government. Being employees of the companies it is the responsibility of the companies to pay them salary and if the company is sustaining losses continuously over a period and does not have the financial capacity to revise or enhance the pay scale, the petitioners cannot claim any legal right to ask for a direction to the Central Government to meet the additional expenditure which may be incurred on account of revision of pay scales. It appears that prior to issuance of the office memorandum dated 12-4-1993 the Government had been providing the necessary funds for the management of public sector enterprises which had been incurring losses. After the change in economic policy introduced in the early nineties, the Government took a decision that the public sector undertakings will have to generate their own resources (0 meet the additional expenditure incurred on accoun....
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....t by the State in the management of PSUs and Banks is restricted whereas, in the case of the TNAU, such power of the State is overarching. 27. As far as payment of gratuity, pension and provident fund are concerned, the provisions of Tamil Nadu Pension Code including the Tamil Nadu Liberalised Pension Rules, 1960 and Family Pension Rules, 1964 of the Tamil Nadu Government are stated to apply to TNAU employees in terms of Chapter XII of the TNAU Rules. Likewise, provident fund is governed by the General Provident Fund Rules of the Tamil Nadu Government. The rate of interest to be paid to subscribers to the General Provident Rules are the same as adopted by the Tamil Nadu Government from time to time. 28. That apart, there are a slew of decisions of the Income-tax Appellate Tribunal, wherein in the context of section 10(10AA) of the Act, employees of several Universities, such 25 the Haryana Agricultural University and Mahatma Gandhi University, have been held to be holding civil posts under the State Government. The decisions are (i) Ram Kanwar Rana v. ITO [2016] 71 taxmann.com 54/159 ITD 431 (Delhi - Trib.), () ITO (TDS) . Mahatma Gandhi University [2019] 107 taxm....
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....s and conditions as may be agreed between the State Government and such company or companies being State Transmission Utility or generating company or transmission licensee or distribution licensee, as the case may be: Provided that the transfer value of any assets transferred hereunder shall be determined, as far as may be, based on the revenue potential of such assets at such terms and conditions as may be agreed between the State Government and the State Transmission Utility or generating company or transmission licensee or distribution licensee, as the case may be. (3) Notwithstanding anything contained in this section, where,- (a) the transfer scheme involves the transfer of any property or rights to any person or undertaking not wholly owned by the State Government, the scheme shall give effect to the transfer only for fair value to be paid by the transferee to the State Government; (b) a transaction of any description is effected in pursuance of a transfer scheme, it shall be binding on all persons including third parties and even if such persons or third parties have not consented to it. (4) The State Government may, after consul....
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.... to the extent specified in the relevant transfer scheme, be deemed to have been incurred, entered into or done by the Board, with the Board or for the State Government or the transferee and all suits or other legal proceedings instituted by or against the Board or transferor, as the case may be, may be continued or instituted by or against the State Government or concerned transferee, as the case may be. (7) The Board shall cease to be charged with and shall not perform the functions and duties with regard to transfers made on and after the effective date. Explanation.- For the purpose of this Part, - (a) Government company" means a Government Company formed and registered under the Companies Act, 1956. (b) company" means a company to be formed and registered under the Companies Act, 1956 to undertake generation or transmission or distribution in accordance with the scheme under this Part. Section 132. (Use of proceeds of sale or transfer of Board, etc.): In the event that a Board or any utility owned or controlled by the Appropriate Government is sold or transferred in any manner to a person who is not owned or controlled by t....