Balan Panicker Ramesh Kumar Vs Union of India (Kerala High Court)
It is the prerogative of the Government to fix the limit of income of encashment of earned leave salary for the purposes of exemption from payment of income tax
The case of Balan Panicker Ramesh Kumar vs. Union of India, decided by the Kerala High Court, revolves around the issue of income tax exemption on encashment of earned leave salary under Section 10 (10AA)(ii) of the Income Tax Act, 1961. The petitioners, retired employees of Public Sector undertakings and Scheduled Banks, challenged the government’s failure to revise the income limit for tax exemption on earned leave salary since 2002.
Background and Arguments
Petitioners’ Contentions: The petitioners argued that despite several pay revisions since 2002, the government had not revised the upper limit of Rs.3 lakhs specified in the notification. They contended that they retired before the latest notification in 2023, which increased the exemption limit to Rs.25 lakhs. They sought a retrospective revision of the income limit to benefit from the increased exemption.
Government’s Position: The government, through its Standing Counsel for Revenue, acknowledged the delay in updating the income limits. They pointed out that while there were judicial precedents directing consideration for revision, the actual notification was issued only in 2023, effective from April 1, 2023. They argued that decisions on such policy matters lie within the domain of the Executive and cannot be dictated by judicial mandate.
