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‘No tax cut on HPF compensation’

Offering partial relief to the workers of Hindustan Photo Film (HPF) in Ooty, the Madras High Court has held that the amount received by them, pursuant to a severance package announced by the Centre is a special privilege/protection granted to them and hence cannot by subjected to income tax deductions.

‘No tax cut on HPF compensation’
Hindustan Photo Film (HPF) in Ooty


Justice TS Sivagnanam in his order while allowing the plea moved in this regard by the Hindustan Photo Film Workers’ Welfare Centre, said “The monetary benefit which will accrue to the employees is in the nature of compensation, which is pursuant to a decision taken by the Government of India specifically for the employees of HPF. Therefore, the amount would be exempted from income tax in terms of the first proviso under Section 10(10B) of the IT Act.” 

However, the judge rejected the claim of the workers to declare the notification and the circular issued with regard to voluntary retirement as illegal and unconstitutional. He held that there was no compulsion to accept the package. Also, pointing out that none who refused the package was before the court, he said, all these cases challenge the notification but “the net effect is all employees want to leave the organisation, but they seek for better terms.” 

HPF, which once enjoyed a monopoly in X-ray films market, became a white elephant for the Centre since 1987 when its staff had either no or little work in the factory. 

A VRS was readied by the Cabinet Committee on Economic Affairs (CCEA), which approved a proposal for providing non-plan budgetary support of Rs 181.54 crore for voluntary retirement at the 2007 notional pay scale. 

However, the workers questioned the VRS terming it as unfair and illegal. It sought payment of 72 months’ salary on 2007 pay scale to each employee, non-deduction of income tax on the severance package, special performance allowance, adjustable advance paid to employees and permission for the employees to occupy the staff quarters till May 1, 2016 at the same rate of rent. Contentious issues boiled down to 72 months’ salary as severance package instead of 60 months, exemption from income tax and no eviction from the quarters.

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