Why forum?

After the introduction of the OERS in RBI in Aug 03, those opting for the scheme could never have imagined that the very dream of their leading a peaceful and happy remaining life would be shattered by the hyper technical approach of Choksi & co (C.A), the Employer bank, and the revenue authorities under M/o Finance, Govt. of India.

The CA, was asked to advise about the applicability of sec 10(10C).He,of course was guided by considerations other than that forced his Employer -the Bank to introduce the Scheme. The opinion tendered was like a programmed computer generated statement-without signatures- with conditional clauses of umpteen 'ifs' and 'buts'.A question arises : Whether the Legal Department was not considered good enough to give their advice about the Scheme?Prima-facie the advice of the CA was held doubtful by Kolkata High court.

And the Bank, deviating from its role as a model employer, and perhaps believing that CA is the only determining authority so far as the tax laws are concerned, incorporated a clause in OERS, making the ‘Ex-Gratia’ taxable at source.

The amount of tax in respect of Ex-Gratia was huge (between 1.5 to 1.90 lakhs for each optee)."It is unfair to expect the employees to forego such a sizeable amount without attempting to claim it in  a lawful manner.” said 'Bombay Chartered Accountant Journal' -January 2006.

Moreover,the average employee is not a legal warrior of Income Tax Act and is not required to dig into the innards of the Taxation Laws which are incomprehensible to a man of ordinary prudence .And that is why CAs flourish on their money-spinning profession. And moreover, when the Bank's Legal Department is not expected to comprehend the Tax-laws ,Can the employee be expected ?

Subsequently, the scheme was held to be in conformity with the section 10(10C) of the Income tax act by all Income Tax Appellate Tribunals (ITAT) in India.

The Assessing officers while scrutinizing the Annual Returns called for the Reserve Bank’s clarification as to why the tax was deducted at source. The bank stated that the OERS is not a VRS under IT Act section 10(10C). On the basis of a letter from the Bank, and without examining the character and implications of the scheme under section 10(10C) read with Rule 2B and 2Ba, CBDT, unlike a watch dog, issued a circular that OERS does not qualify for  exemption of ex-gratia up to Rs.5 lacs.

As a result, the assessing officers, throughout the country, issued notices u/s143 (3) to the claimants disallowing claims and initiating penalties.

Undeterred by these attacks, groups of determined individuals at Mumbai, Kolkata, Chennai, Delhi, Jaipur, Nagpur, Kanpur, Patna, Chandigarh , decided to fight it out.Kokatta optees under the leadership of Kishor Chakraborty filed a writ petition before the Hon’ble Kolkata who prima facie termed the advice of Choksi & co. as doubtful. So the fight spread to every part of the country.   

And after experiencing various ups and downs in the course of legal battles at all the forums of Income-tax department such as, CIT, ITAT, we emerged victorious in all the Income tax Appellate tribunals in India.

All the Appellate Tribunals have decided that the scheme is in accordance with section 10(10C) and rules 2B and 2Ba of the Act and the optees are eligible for exemption up to Rs.5 lakhs.

 But the Revenue authorities never yield to reasoning and go on preferring appeals on technical grounds even though no law point is involved, wasting huge tax-payers money, in spite of the fact that CBDT itself issued a circular that debars the departments for going in appeals to courts where the refunds are for less than 4 lakhs of Rupees.

Further, when the optees of the OERS were engaged in grim battles with revenue authorities, the Bank entered into an agreement with all the Associations of the working employees to deny the arrears of wage revision to optees of OERS .The process of revision was started prior to the date of its applicability i.e. 1-11-02.  Such agreements have been entered into for the first time in the history of the Bank since 1935. The history of the Associations, who claim to be the custodians of well being of all the employees, is also devoid of any such instance.

Without going into merits of the claims of the Associations, it is for the first time that these Associations have entered into an agreement bartering the interests of the retirees in lieu of some other fringe benefits for the working employees. So far, Agreements have been entered into for giving something to all and not for denying something to a large section, which is legitimately due to all.

Aggrieved by this act of bank, the OERS Associations/groups at various centers have been forced to move High Courts at Nagpur, Kolkatta, Mumbai, and Delhi. The optees at other centers are also moving in this direction.

Needless to say, to defend our legitimate dues, the legal fights ahead will be at the High Courts and  bank will definitely move Supreme court. As the costs of litigation and other expenses incidental thereto are huge and beyond the reach of individuals/groups or sometimes even small  regional associations for the optees,a combined effort of one and all is necessary to meet the challenges posed by the employer and M/o finance. Despite the heavy costs, the distances are wide spread and the process of getting information immediately from courts is cumbersome and costly.

Hence, this forum came into being to defend ourselves. No doubt there is a long struggle ahead and we shall fight it with all our strength.

“Although retired, we shall never be tired ”.