Page 104 - DTPA Journal December 21
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prescribed by the Central Government by 1947.
notification in the official gazette, having In case the exemption is available only to a
regard to the limit applicable to Central worker covered under the Industrial Dispute
Government employees. Act, then compensation has obviously to be
In view of aforesaid language used in respect paid to such workmen u/s 25F of Industrial
of employees other than the employees of the Dispute Act and, accordingly, there is no
Government department and employees need of any other limit prescribed under this
covered under the Payment of Gratuity Act, section. Further, reference to any other Act,
notification is required to be issued from time Contract, Award, etc. is redundant.
to time by the Central Government. Recommendation: It is suggested that the
Recommendation : It is suggested that the scope of section 10(10B) should be extended
requirement of separate notification by the to all the employees whether under the
Central Government in respect of employees Industrial Dispute Act or not and a limit for
other than the employees of the Central the purpose of exemption should be
Government can be done away by prescribed, may be the limit on the basis of
straightaway providing the limit as is retrenchment compensation for which a
applicable to Central Government employees workman is entitled u/s 25F of Industrial
or as is provided in Payment of Gratuity Act. Dispute Act or any other limit as may be
[It may be stated that presently the notification considered appropriate.
increasing the exemption limit to Rs.20 lacs 4. Restructuring of provisions regarding
has not been issued for the purpose of clause charitable institutions:
(iii) of section 10(10) of Income-tax Act Presently there are different provisions
whereas the limit for the Central Government applicable to charitable institutions u/s
employees as well as under Gratuity Act has 10(23C) and section 11 to 13 of the Act.
been raised quite some time ago and Definition of term ‘charitable purpose’ has
employees as well as employers are in been given in section 2(15) of the Act. There
difficulty in the absence of the notification is lot of litigation presently as regards the
increasing the exemption limit. Such definition of charitable purpose as well as of
problems can be avoided, if necessary, application of income etc. As per the existing
amendment, as suggested above, is made in provisions a charitable institution is
the section.] permitted to accumulate its income for a
3. Section 10(10B) – Exemption in respect of period of five years and income applied for
compensation received on retrenchment: capital expenses is also allowable as
The section provides that compensation deduction. In view of the fact that capital
received on retrenchment by a worker under expenditure is allowed as application
the Industrial Dispute Act or under any other towards charitable purpose, it has become a
Act or Contract of Service, etc. subject to the general phenomenon that educational
limit of the amount as calculated as per section institutions, hospitals, etc. in some cases, are
25F of Industrial Dispute Act or amount as being run as industry and are charging high
may be notified which at present is Rs.5 lacs. fees for the services provided by them and
The term ‘worker’ has been defined to mean amount is accumulated and is spent for
the worker under the Industrial Dispute Act, setting up another school, college or hospital.
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