2006 (6) TMI 84 - HC - Income Tax

Maintainability of petition exemption u/s 10(10C) - Petition by an unregistered association, formed by the employees of the Reserve Bank of India, who have opted to retire under the Optional Early Retirement Scheme (OERS) framed by the Reserve Bank of India (RBI) - exemption under section 10(10C) with respect to ex gratia payment made to the employees denied on ground that scheme did not conform to the provisions of rule 2BA of the Income-tax Rules - assessees have filed appeals against the orders passed under section 154 and such appeals are pending. In this view of the matter, considering the availability of the adequate and effective alternate remedy of appeal, this is not a fit case to entertain this petition at this stage. Even otherwise, an unincorporated association is not a legal person and as such this writ petition is not maintainable at the instance of the petitioner-association

Summary

Issues:
Challenge to exemption under section 10(10C) of the Income-tax Act, 1961 for ex gratia payment under the Optional Early Retirement Scheme (OERS) by an unregistered association of RBI employees.

Analysis:
The judgment pertains to a petition filed by an unregistered association of employees of the Reserve Bank of India challenging a letter issued by the Income-tax Department regarding the exemption under section 10(10C) of the Income-tax Act, 1961 for ex gratia payments made under the Optional Early Retirement Scheme (OERS). The association sought directions against the Income-tax Department to refrain from taking action against the employees and to not pass any rectification orders under section 154 of the Act. The court noted that individual appeals by the employees against the section 154 orders were pending, indicating the availability of an alternate remedy. The court also highlighted that an unincorporated association is not a legal entity, rendering the writ petition not maintainable. The judgment cited the case of Sand Carrier's Owners' Union v. Board of Trustees for the Port of Calcutta to support this stance.

The court, therefore, dismissed the petition at the initial stage, emphasizing the availability of an adequate alternate remedy through individual appeals and the lack of legal standing for the unregistered association to file a writ petition. The dismissal was made without imposing any costs on the petitioner-association. The judgment clarified that all contentions raised by the association were kept open despite the dismissal of the petition. This decision underscores the importance of legal standing and the availability of alternate remedies in challenging tax-related matters, particularly when raised by unincorporated associations.