TaxTMI 
TaxTMI 
2026 (2) TMI 1437
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....h its DGM (Taxation). The 1st petitioner is stated to be an association of retired employees of BSNL, and the 2nd and 3rd petitioners are stated to be the members of the 1st petitioner - association. The 2nd and 3rd petitioners originally were employed with the Department of Telecommunication (DoT), and upon the creation of the 6th respondent company, they opted for continuing with the company, and on the basis of the option so exercised, they were continuing with the 6th respondent herein. That being so, the 6th respondent came out with a Voluntary Retirement Scheme - 2019, as evidenced by Ext. P6, and attracted by the Scheme, the 2nd and 3rd petitioners decided to avail the benefits of the Scheme. It is subsequently that the petitioners came to notice that the 6th respondent, while calculating the retirement benefits of the 2nd and 3rd petitioners, deducted various amounts representing tax allegedly due on "leave encashment amounts", under the Income Tax Act, 1961 (hereinafter referred to as the 'Act'), essentially relying on the communication at Ext. P11. It is in such circumstances that petitioners have approached this Court seeking to challenge the communication at Ext. P11. T....
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....refore, he would add that since admittedly, the 2nd and 3rd petitioners have been absorbed in the service of the 6th respondent - a company, it is the provisions of clause (ii) that would apply upon their retirement. 6. I have considered the rival submissions as well as the connected records. 7. The issue arising for consideration, as noticed earlier, is as to whether the respondents are justified in taking the stand that while disbursing the leave encashment amounts, they can deduct the tax at source with reference to the provisions of Section 192 of the Act. It is to be noticed that the provisions of Section 192 of the Act provide for the deduction of tax with reference to the payment of salaries. Pension, for the purpose of deduction of tax, is with reference to the mandate under Section 192 of the Act. The provisions of Section 192 of the Act would apply only in a situation where a particular amount paid to an employee is chargeable under the head "salaries". Therefore, ultimately, it is only in a situation where the particular payment is chargeable under the provisions of the Act, the provisions of Section 192 of the Act will apply. It is with reference to the aforementi....
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....t" as a cash equivalent of the leave salary. A reading of clause (i) would show that whatever amount received towards the leave salary is entitled to the benefits extended thereunder. As against this, clause (ii) provides for a maximum eligibility for the cash equivalent, which does not exceed ten months. Clause (ii) would apply with respect to cases which are not covered by clause (i). The case of the BSNL is to the effect that the retirement of the petitioner Nos. 2 and 3 would fall under clause (ii). As against this, the petitioners contend that their case falls under clause (i). 10. The fact that the 2nd and 3rd petitioners were admittedly employed with the DoT originally is not in dispute. It is only subsequently, upon the formation of the 6th respondent company, that the 2nd and 3rd petitioners have opted to continue with the company. The circumstances, like the afore, are visualised with reference to the provisions of Rule 37A of CCS Rules. Rule 37A of the CCS Rules specifically provides for the conditions for payment of pension on absorption consequent upon conversion of a Government Department into a Public Sector Undertaking (PSU). In the case at hand, as noticed ....
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....ined in sub-rules (13) to (21) shall apply in the case of conversion of the Departments of Telecom Services and Telecom Operations into Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited in which case the pensionary benefits including family pension shall be paid by the Government. (23) For the purposes of payment of pensionary benefits including family pension referred to in subrule (22), the Government shall specify the arrangements and manner including the rate of pensionary contributions to be made by Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited to the Government and the manner in which financial liabilities on this account shall be met. (24) The arrangements under sub-rule (23) shall be applicable to the existing pensioners and to the employees who are deemed to have retired from the Government service for absorption in Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited and shall not apply to the employees directly recruited by the Bharat Sanchar Nigam Limited for whom they shall devise their own pension schemes and make arrangements for funding and disbursing the pensionary benefits." 11. The provision....