What did the High Court hold?

The High Court allowed KSRTC to deduct income tax on the gratuity amount exceeding Rs. 3,50,000/-. The court also upheld the inclusion of the employee's 'badli' service period for gratuity calculation.

The Karnataka State Road Transport Corporation (KSRTC) challenged orders regarding gratuity payment to an employee. KSRTC sought to deduct income tax from the gratuity amount.

What were the issues?

Whether income tax can be deducted from gratuity payments and if 'badli' service should be included for gratuity calculation.

Karnataka State Road Transport… vs The Deputy Labour Commissioner | Karnataka High Court 2013

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 7TH DAY OF OCTOBER 2013

BEFORE

THE HON’BLE MR. JUSTICE RAM MOHAN REDDY

WRIT PETITION No.28407/2013 (L-PG)

BETWEEN:

Karnataka State Road Transport Corporation Bannimantap Mysore Mysore City Division By its Divisional Controller Represented by its Chief Law Officer

.. PETITIONER

(By Smt. H.R. Renuka, Advocate)

AND:

The Deputy Labour Commissioner and the Appellate Authority under the Payment of Gratuity Act Region 2, Karmeeka Bhawan Bannerghatta Road Bangalore-560 056

The Assistant Labour Commissioner and Controlling Authority under the Payment of Gratuity Act Mysore Division Mysore-570 001

2 3. Krishna Murthy S/o late Krishnaiah Adult LIG 314, Hebbal III Stage Mysore – 570 016

.. RESPONDENTS

(By Sri. H. Venkatesh Dodderi, AGA.,)

This Writ petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the order made in Annexure ‘A’ dated 25.04.2011 passed by the second respondent and quash the order made in Annexure ‘B’ dated 10.09.2012 issued by respondent No.1.

This petition coming on for preliminary hearing this day, the Court made the following :

ORDER

Having heard the learned counsel for the petitioner and examined the order of the Controlling Authority and that of the Appellate Authority, the orders impugned call for interference for a limited purpose of permitting the petitioner to deduct income tax on the gratuity amount in excess of Rs.3,50,000/- and remit to the tax authorities under advise to the workman, since such a deduction is a statutory deduction under the Income Tax Act, 1961.

Although, the learned counsel makes a faint effort to submit that the period of service from 1971 to 1979 as a badli cannot be included to compute the period of service rendered by the workman to determine gratuity, I am afraid that submission does not hold water in the light of the decision of the Division Bench of this Court in W.A. No.710/2009 disposed of on 11.09.2009 confirming the order of the learned Single Judge holding that in the absence of the records, more appropriately, service records, indicating the past service that the workman had rendered service while on the badli list. Hence no exception can be taken to the findings of the authorities to include the period from 1971 to 1979 as continuous service for the purpose of gratuity under the Payment of Gratuity Act, 1972.

Petition is accordingly disposed off reserving liberty to the petitioner to deduct income tax from the gratuity payable to the respondent workman and remit

4 the same to the authorities, if not already done, and after effecting deduction, pay the balance of gratuity to the respondent workman.

Sd/- JUDGE

Cs/-

KARNATAKA STATE ROAD TRANSPORT CORPORATION vs. THE DEPUTY LABOUR COMMISSIONER

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