KARNATAKA STATE ROAD V. THE DEPUTY LABOUR COMMISSIONER

WP/17478/2015

AI Insights

The case involves the Karnataka State Road Transport Corporation (petitioner) and a former employee, Ghouse Pasha (third respondent), concerning the payment of gratuity upon retirement. The third respondent, who served as an Artisan from February 2, 1970, until his retirement on June 30, 2007, filed a claim for the difference in gratuity amounting to Rs.67,251/- with interest. The petitioner had already paid a substantial gratuity amount but deducted tax as the total gratuity exceeded the tax-free limit of Rs.3,50,000 as per the Income Tax Act. The main legal contention was whether the tax deduction was appropriate and how much the third respondent was entitled to receive post-deduction.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 693606 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 26-03-2018
• Assessment Year: misc
• Laws Referred To: Payment of Gratuity Act, Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: KEERTHI NAIK; K SRINIVASA
• Assessee Lawyers: H R RENUKA
• Keywords: Gratuity; Income Tax; Superannuation; Tax deduction at source
• Section: 226; 227

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF MARCH, 2018 BEFORE THE HON’BLE MR. JUSTICE L. NARAYANA SWAMY WRIT PETITION NO.17478/2015 (L-KSRTC) BETWEEN: KARNATAKA STATE ROAD TRANSPORT CORPORATION, BANGALORE CENTRAL DIVISION, BANGALORE BY ITS DIVISIONAL CONTROLLER, REPRESENTED BY ITS CHIEF LAW OFFICER ... PETITIONER (BY SMT : H R RENUKA, ADV. ) AND: 1. THE DEPUTY LABOUR COMMISSIONER AND APPELLATE AUTHORITY, UNDER THE PAYMENT OF GRATUITY ACT, REGION 2, KARMEEKA BHAVANA BANNERGHATTA ROAD, BANGALORE - 560 029. 2. THE ASSISTANT LABOUR COMMISSIONER AND CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, DIVISION 4, KARMEEKA BHAVANA, BANNERGHATTA ROAD, BANGALORE - 560 029. 3. GHOUSE PASHA 2 S/O MOHAMMED IMAM SAB ADULT NO.893, B.B. COLONY, AZEEZ SAITNAGAR, MYSORE - 570 001. ... RESPONDENTS (BY SRI.KEERTHI KUMAR NAIK, ADV. FOR R1 & R2; SRI.K.SRINIVASA, ADV. FOR R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDERS PASSED DTD.31.01.2013 VIDE ANNE-A PASSED BY THE R-2 AND ETC.,. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R The third respondent-workman joined the services of the petitioner as an Artisan on 02nd February 1970 and on attaining the age of superannuation, he retired from service on 30th June 2007. He filed an application before the second respondent- Assistant Labour Commissioner, Controlling Authority to pay the difference of gratuity of Rs.67,251/- with interest at 10% per annum from 03rd February 2009 to 31st January 2013 with interest sum of Rs.26,900/-, in all Rs.84,151/-. 3 2. The learned counsel appearing for the petitioner- Corporation submits that on attaining superannuation, the respondent-workman was entitled for Rs.5,57,208/- as gratuity, of which Rs.5,05,293/- has been paid. Since the amount which was paid to the third respondent-workman is more than Rs.3,50,000/-, tax amount of Rs.48,652/- was deducted at source and remitted to the Income Tax department. The amount of Rs.67,251/- which was directed to pay to the third respondent-workman, out of that amount, if the tax that is paid to the Income Tax department is deducted, then the balance to be paid to the third respondent would be Rs.18,599/- and the third respondent is entitled to that amount with interest and the same shall be paid by the petitioner. The learned counsel further submits that if the third respondent is entitled for the amount which is deducted and remitted to the Income Tax department, liberty may be reserved to the third respondent to approach the Income Tax department. 3. The learned counsel for the third respondent submits to dismiss the petition. 4 4. Heard the learned counsel for the parties. The appointment of the third respondent-workman in the petitioner- Corporation, his retirement from service on superannuation are not in dispute; and payment of gratuity is also not in dispute. The third respondent has also not disputed the fact that he has received from the petitioner an amount of Rs.5,05,293/-. He is only particular about the remaining amount to be paid. When an amount is to be paid and that amount exceeds the ceiling limit as per the provisions of Income Tax Act, it is mandatory that the tax amount has to be deducted at source. In the present case, the ceiling is Rs.3,50,000/- and for the amount received in excess, income-tax has to be deducted. Under these circumstances, there is a justifiable reason in the submission of the counsel for the petitioner that since the gratuity amount exceed the limit of Rs.3,50,000/-, tax amount has been deducted at source and remitted to the Income Tax department. Hence from the amount of Rs.67,251/- to be paid to the third respondent, the amount of Rs.48,652/- towards income-tax has to be deducted and the remaining of Rs.18,599/- with interest is to be paid to the third respondent. Under the circumstance, the 5 order of the Controlling Authority stands modified. The petitioner to pay the third respondent an amount of Rs.18,599/- with interest at 6% per annum as awarded by the first respondent. In respect of the amount remitted to the Income Tax authorities, liberty is reserved to the third respondent to make necessary application to the authorities and if such an application is filed, it is for the Income-tax authorities to consider and pass appropriate orders on the same. Petition accordingly disposed of. Sd/- JUDGE lnn "