Subhash Bansal And Others v. M.m. Kumar, J

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH C.W.P. No. 19382 of 2006 Date of Decision: 4 .4 . 2008 Subhash Bansal and others …Petitioners Versus Income Tax Officer, Ward-6, Patiala and others …Respondents CORAM:HON’BLE MR JUSTICE M.M. KUMARHON’BLE MR JUSTICE AJAY KUMAR MITTAL Present:Mr Pankaj Jain, Advocate, Mr Deepak Aggarwal, Advocate, andMr Prakul Khurana, Advocate,for the petitioners. Mr. Yogesh Putney, Advocate, andMr S.K. Garg Narwana, Advocate,for the respondents. M.M. KUMAR, J. This order shall dispose of Civil Writ Petition Nos.19382, 19623 and 20581 of 2006 and 159 and 2101 of 2007 whichinvolved a large number of senior citizens and retirees of Punjab StateElectricity Board (for brevity 'the Board'). The short questioninvolved in these petitions is as to “whether interest income that hasaccrued on the credit balance maintained by the employees of theBoard in their provident fund governed by the Provident Fund Act,1925 (for brevity, 'the 1925 Act') after their retirement wouldcontinue to qualify for exemption from income tax ?”. For the sake ofbrevity, the facts are being referred from C.W.P. No. 19382 of 2006.These petitions filed under Article 226 of the Constitution pray forquashing notices issued under Section 148 of the Income-tax Act, 1961 (for brevity, ‘the 1961 Act’), pursuant to reassessmentproceedings. It has further been prayed that the respondents bedirected not to proceed further till the disposal of preliminaryobjections by passing a speaking order. For the sake of brevity, thefacts are being referred from C.W.P. No. 19382 of 2006 because factsin every case would not be significant for the question of law raisedbefore us. Brief facts of the case are that the petitioner herein aresenior citizens and retired employees of the Board. The petitionersare income tax assessees and they used to file their respective returnsduring their service career and even after retirement. It is claimedthat the petitioners are covered under the Punjab State ElectricityBoard Provident Fund Regulations, 1960 (for brevity, ‘the 1960Regulations’), which have been notified under Section 79(c) of theElectricity Supply Act, 1948 (for brevity, ‘the 1948 Act’), videnotification No. 777/PSEB, dated 9.9.1960. As per provisions ofRegulation 38 of the 1960 Regulations, interest component on creditbalance retained in the provident fund is exempted from tax in termsof the provisions of Chapter-III Section 10(11) of the 1961 Act,which provides for exemption on any payment received by theassessee from a fund to which the 1925 Act applies. In this regard,reference has been made to clarification issued by the Central Boardof Direct Taxes (for short ‘the CBDT’), vide letter No. F.No.275/192/2005IT(B), dated 15.6.2006.(Annexure P.5) The respondents initiated reassessment proceedingsagainst the petitioners and in the last week of March 2006, separatebut similarly worded notices under Section 148 of the 1961 Act, inrespect of different assessment years ranging from 2001-02 to 2004-05 have been issued to them (Annexure P-1). Thereafter, during themonths of August 2006 to November 2006, the Income Tax Officer-respondent No. 1 sent separate letters to the petitioners asking them toattend his office in person or through a representative to clarifycertain points in connections with the returns of income submitted bythem in respect of different assessment years (Annexure P-2). Adetailed chart showing the particulars of the petitioners in relation toassessment year, escaped income, returned income date of filing ofreturn etc. has been placed on record as Annexure P-3. Thepetitioners also requested respondent No. 1 for supply of the reasonsfor reopening of assessment in their respective cases, which weresupplied. One of the letter dated 1.9.2006, issued to petitioner No. 1has been placed on record as Annexure P-4, wherein following reasonhas been mentioned:- “On the basis of information received from ITO, Ward-5(TDS)-cum-TRO, Patiala where the Chief AccountsOfficer (GPF) of Punjab State Electricity Board, Patialaremained failed to deduct the tax at source from theinterest income of those persons who had kept theircredit balance in the GPF wilfully even after the date ofretirement/quitting the job. The interest should have been taxed under the head income from other sources’.On the date of retirement on the credit balance of GPFincluding interest thereon was Rs. 18,41,011/-.Although the assessee was entitled to withdraw thewhole amount yet he wilfully kept the amount in GPFaccount and claimed it exempted from tax beyond thedate of retirement. Any interest earned on such creditbalance in GPF account after retirement does not fall inthe definition of GPF but comes under the head ‘incomefrom other sources’ and is liable to be taxed. Theassessee has not declared the amount of interest earnedfor taxation in the assessment years 2002-03 to 2004-05.Therefore, I have reasons to believe that interest incomeof Rs. A.Y. 2002-03 Rs. 54959/-, A.Y. 2003-04 Rs.170637/- & A.Y. 2004-05 Rs. 165329/- has escapedassessment.” The petitioners also filed detailed preliminary objectionsasserting that interest income cannot be brought within the scope andambit of tax in contravention of various provisions of the 1925 Act,1948 Act, 1961 Act and 1960 Regulations as well as clarificationdated 15.6.2006 issued by the CBDT (P-5). It was, thus, requestedthat before proceeding further in the matter, preliminary objectionsshould be decided by passing a speaking order (P-6). However,respondent No. 1 instead of deciding the preliminary objections,issued further notices under Section 143 (2) of the 1961 Act (P-7) again asking for the details of the provident fund. Theaforementioned notices under Section 148, 142 and 143(2) of the1961 Act are subject matter of challenge before this Court. In the written statement filed on behalf of therespondents a preliminary objection has been raised that the writpetition is not maintainable, inasmuch as, orders of assessment havebeen passed in the cases of the petitioners and they have got effectivestatutory remedy of appeal under Section 246 of the 1961 Act beforethe CIT (A), against the assessment orders and further appeal beforethe Income Tax Appellate Tribunal, under Section 253 of the 1961Act. Justifying initiation of reassessment it has been asserted that thepetitioners have kept their credit balance of GPF with the Board evenafter their retirement and received interest income on such deposits,which is nothing else but retirement benefit of GPF. Since thepetitioners did not file their return of income showing interestincome, the same escaped assessment and case was reopened underSection 147 of the 1961 Act by issuing notices under Section 148 ofthe 1961 Act. With regard to the clarification issued by the CBDT,dated 15.6.2006, banked upon by the petitioners, it has been pointedout that the same has been probably issued considering the period ofretirement upto 6 months from the date of retirement. Therefore, inthe present case the interest income is liable to be taxed under thehead ‘Income from other sources’.Mr. Pankaj Jain, learned counsel for the petitioners hasargued that assessment proceedings against all these petitioners have been re-opened under Section 147 of the 1961 Act for the reasonsdisclosed in the letter dated 1.9.2006 sent by the I.T.O. to one of theassessee-petitioner. The principal reason given by the I.T.O. is thatChief Accounts Officer (GPF) of the Board failed to deduct the tax atsource from the interest income of these persons who had kept theircredit balance in the GPF wilfully after the date of retirement/quitting the job because the interest which has accrued afterretirement should have been taxed under the head 'income from othersources'. He has further stated that the interest income has escapedassessment and therefore assessment under Sections 147 and 148 ofthe 1961 Act was required to be re-assessed. Learned counsel hasmaintained that the reasons are not sustainable because a query wassent by the Chief Accounts Officer of GPF Section of the Board tothe Chairman, CBDT on 17.4.2006 (Annexure P.5) raising thequestion whether the interest paid after the date of retirement of theemployee under Regulation 16(4) of the Regulations was liable toTDS or not. The CBDT has replied the question vide letter dated15.6.2006 by stating that interest on GPF is exempt from income taxas per provisions of Section 10(11) of the 1961 Act and therefore noTDS was required to be deducted from the payment of interest.( Annexure P.5 colly.) Mr. Jain has also referred to Regulation 38 of theRegulations and has submitted that it has been specifically providedthat the amount standing at the credit of the subscriber in theprovident fund account normally becomes payable on quitting of service i.e. on retirement, proceeding on leave preparatory toretirement or death or quitting the service on re-employment.However, Regulation 38 provides that if a subscriber so desires theamount at his credit in the Fund could be retained for a period of fiveyears from the date of retirement, quitting of service etc. In thatregard, the Regulation requires sending of intimation in writing to theAccounts Officer either before the date of retirement or quittingservice or re-employed or within six months thereof and the balanceat the credit of the subscriber would continue to be retained in thefund. A period of five years has to be reckoned from the date of actualretirement/ quitting service and not from the date of commencementof leave preparatory to retirement or the date of exercise of option toretain the money in the fund. He has also pointed out that specificprovision is that the amount retained in the Fund after retirementwould continue to enjoy the same freedom from attachment ofcreditors under Section 3 of the 1925 Act and also exemption fromincome tax. Mr. Jain has then made reference to schedule appended to 1925 Act and has argued that sub section 8(2) of the 1925 Act hasempowered the appropriate Government to issue notification in theofficial gazette directing that the provisions of 1925 Act are to applyto any Provident Fund established for the benefit of the employees ofany institution specified in the Schedule. Learned counsel has pointedout that the Board is included in the list of institutions as shown inthe schedule. Learned counsel has further submitted that Section 10 (11) of the 1961 Act makes it absolutely clear that in computing thetotal income of the previous year of any person any payment from aProvident Fund to which 1925 Act applies or from any otherprovident fund set up by the Central Government is not to beincluded. Mr. Jain has then referred to the definitions of expression (11) of the 1961 Act makes it absolutely clear that in computing thetotal income of the previous year of any person any payment from aProvident Fund to which 1925 Act applies or from any otherprovident fund set up by the Central Government is not to beincluded. Mr. Jain has then referred to the definitions of expression 'Compulsory Deposit' and 'Provident Fund” as given in section 2(a)and 2(e) of the 1925 Act and submitted that Provident Fund is tomean a Fund in which any subscriptions or deposits of any class orclasses of employees are received and held in their individualaccounts. It also includes any contributions, interest or incrementaccruing on such subscriptions, deposits or contributions under theRules of the Fund. He has maintained that interest income which hasaccrued to the petitioners after their retirement would certainly becovered by the definition of expression 'Provident Fund' as given inSection 2(e) of the 1925 Act. Mr. Jain has pointed out that all theseissues have been raised by the petitioners while sending reply to thenotice issued under Sections 147and 148 of the 1961 Act ( AnnexureP.6). Mr. Yogesh Putney, learned counsel for the respondentshas submitted that Regulation 38 of the Regulations cannot be read inisolation and if Regulation 41 is read alongwith then it would becomeclear that after the retirement of an employee if the credit in theProvident Fund is not withdrawn then the same is shifted todeposits. According to the learned counsel the expression 'Deposit' is entirely different than the word 'Provident Fund' and the character ofthe fund after retirement of the employee would undergo a changeand it would assume the character of deposit. Therefore, theprovisions of Section 10(11) of the 1961 Act are not to apply to sucha case. He has further submitted that the petitioner has the remedy offiling appeal before the C.I.T. (Appeals) and then to the Tribunal. Inthat regard he has referred to the order dated 17.5.2007 passed by theCIT(Appeals), Patiala setting aside the order of the I.T.O (Mark “A”).He has insisted that the petitioners be asked to first exhaust theremedy of statutory appeal. Having heard the learned counsel for the parties at aconsiderable length we are of the considered view that all thesepetitions merit acceptance. We may first deal with the preliminaryobjection raised by Mr. Putney. According to the learned counsel thepetitioners have regular remedy of appeal under Section 246 of the1961 Act and, therefore, the petitioners must be relegated to theremedy of appeal by dismissing the writ petitions under Article 226of the Constitution. It is true that alternative efficacious remedy ofappeal may ordinarily be a bar to the filing of a writ petition,however, it is equally true that it is a self-imposed bar by the writcourt and it does not constitute an absolute bar restraining the courtsthat in all such cases the petitioners should be asked first to avail theremedy of appeal. It is a rule of prudence and caution. It is not a ruleof law. Hon’ble the Supreme Court in the case ofState of Tripurav. Manoranjan Chakraborty, (2001) 10 SCC 740, in para 4 has heldas under:- “4.……It is, of course, clear that if gross injustice isdone and it can be shown that for good reason the courtshould interfere, then notwithstanding the alternativeremedy which may be available by way of an appealunder Section 20 or revision under Section 21, a writcourt can in an appropriate case exercise its jurisdictionto do substantive justice. Normally of course theprovisions of the Act would have to be complied with,but the availability of the writ jurisdiction should dispelany doubt which a citizen has against a high-handed orpalpable illegal order which may be passed by theassessing authority.” Manoranjan Chakraborty, (2001) 10 SCC 740, in para 4 has heldas under:- “4.……It is, of course, clear that if gross injustice isdone and it can be shown that for good reason the courtshould interfere, then notwithstanding the alternativeremedy which may be available by way of an appealunder Section 20 or revision under Section 21, a writcourt can in an appropriate case exercise its jurisdictionto do substantive justice. Normally of course theprovisions of the Act would have to be complied with,but the availability of the writ jurisdiction should dispelany doubt which a citizen has against a high-handed orpalpable illegal order which may be passed by theassessing authority.” We are further of the view that it would result in travestyof justice if such a large number of persons nay senior citizens arerelegated to the alternative remedies of filing an appeal after appeal inthe evenings of their lives. For the aforementioned view we drawsupport from the following observations of Hon’ble the SupremeCourt in the case ofSurya Dev Raiv. Ram Chander Rai, (2003) 6SCC 675:- “38.……Care, caution and circumspection need to beexercised, when any of the above said two jurisdictionsis sought to be invoked during the pendency of any suitor proceedings in a subordinate court and the error though calling for correction is yet capable of beingcorrected at the conclusion of the proceedings in anappeal or revision preferred there against andentertaining a petition invoking certiorari or supervisoryjurisdiction of the High Court would obstruct the smoothflow and/or early disposal of the suit or proceedings. TheHigh Court may feel inclined to intervene where theerror is such, as, if not corrected at that very moment,may become incapable of correction at a later stage andrefusal to intervene would result in travesty of justice orwhere such refusal itself would result in prolonging ofthe lis.” “39.Though we have tried to lay down broadprinciples and working rules, the fact remains that theparameters for exercise of jurisdiction under Articles 226or 227 of the Constitution cannot be tied down in astrait-jacket formula or rigid rules. Not less than often,the High Court would be faced with a dilemma. If itintervenes in pending proceedings there is bound to bedelay in termination of proceedings. If it does notintervene, the error of the moment may earn immunityfrom correction. The facts and circumstances of a givencase may make it more appropriate for the High Court toexercise self-restraint and not to intervene because theerror of jurisdiction though committed is yet capable of being taken care of and corrected at a later stage and thewrong done, if any, would be set right and rights andequities adjusted in appeal or revision preferred at theconclusion of the proceedings. But there may be caseswhere “a stitch in time would save nine”. At the end, wemay sum up by saying that the power is there but theexercise is discretionary which will be governed solelyby the dictates of judicial conscience enriched by judicialexperience and practical wisdom of the judge.”(emphasis added) As a sequel to the above discussion we do not find anysubstance in the preliminary objection raised by the learned counselfor the respondents. Accordingly it stands over-ruled. Therefore, wedeem it just and appropriate to decide the matter on merit. In order to appreciate the argument raised on behalf ofthe petitioners it would be apposite to consider the substantiveprovision of Section 10 of the 1961 Act which deals with suchincome that do not form part of total income. Sub section 11 ofSection 10 of the 1961 Act in unequivocal terms provides that anypayment from provident fund would not constitute part of totalincome. In other words, it would be exempt from income tax. Section10(11) of the 1961 Act reads thus: “ Incomes not included in total income. As a sequel to the above discussion we do not find anysubstance in the preliminary objection raised by the learned counselfor the respondents. Accordingly it stands over-ruled. Therefore, wedeem it just and appropriate to decide the matter on merit. In order to appreciate the argument raised on behalf ofthe petitioners it would be apposite to consider the substantiveprovision of Section 10 of the 1961 Act which deals with suchincome that do not form part of total income. Sub section 11 ofSection 10 of the 1961 Act in unequivocal terms provides that anypayment from provident fund would not constitute part of totalincome. In other words, it would be exempt from income tax. Section10(11) of the 1961 Act reads thus: “ Incomes not included in total income. 10.In computing the total income of a previous year ofany person, any income falling within any of thefollowing clauses shall not be included- (1) to (10)xxxxxxxx (11) any payment from a provident fund to which theProvident Funds Act, 1925 (19 of 1925) applies or fromany other provident fund set up by the CentralGovernment and notified by it in this behalf in theofficial gazette.” A perusal of the afore-mentioned provision would show thatany payment received by an assessee from a provident fund to which1925 Act applies would not constitute a part of total income. In otherwords, it would thus qualify for exemption from income tax. It is thusobvious that since payment of interest is received by the assessee/employee from provident fund it would also qualify for exemptionfrom income tax provided the provisions of 1925 Act applies.Moreover, the expression 'provident fund' has been defined in Section2(e) of the 1925 Act which reads thus: “ “2(e) “Provident Fund” means a fund in whichsubscriptions or deposits of any class or classes ofemployees are received and held in their individualaccount, and includes any contributions and any interestor increment accruing on such subscription, deposits orcontributions under the rules of the Fund” A perusal of the above section makes it evident that ProvidentFund means the fund in which subscription or deposit of any class orclasses of employees are received and held in their individualaccounts. It further shows that the provident fund would include anycontribution and any interest or increment accruing on suchsubscription, deposits or contributions under the rules of the fund It isthus crystal clear that the element of interest in provident fund wouldnot constitute part of total income and as such would assumeexemption from the income tax. In order to ascertain as to whether the provisions of 1925Act are applicable to the provident fund maintained by the Board areference may be made to Section 8(2) of the 1925 Act which conferpower on the appropriate government to issue notification in theofficial gazette directing that the provisions of 1925 Act are to applyto any provident fund established for the benefit of the employees of aparticular institution specified in the schedule. A perusal of theschedule appended to 1925 Act shows that the name of the Boardnamely Punjab State Electricity Board has already been notified. The principal controversy as to whether the interestincome from provident fund would continue to qualify for exemptionfrom income tax could be answered by making reference to theregulations framed by the Board. Regulation 38 deals with providentfund after an employee quit service either by retirement, proceedingon leave preparatory to retirement or death or otherwise. Relevantportion of Regulation 38 is reproduced hereunder: The principal controversy as to whether the interestincome from provident fund would continue to qualify for exemptionfrom income tax could be answered by making reference to theregulations framed by the Board. Regulation 38 deals with providentfund after an employee quit service either by retirement, proceedingon leave preparatory to retirement or death or otherwise. Relevantportion of Regulation 38 is reproduced hereunder: “38. Under Regulations, 31,32 or 37 the amount standingat the credit of the subscriber in the fund normallybecomes payable on his quitting service i.e. onretirement , proceeding on leave preparatory toretirement or earlier death or quitting service of re-employment etc. but if a subscriber so desires the amountat his credit in the fund may be retained in the fund for aperiod of five years, from the date of his retirement,quitting service after re-employment, subject to hissending an intimation in writing to the Accounts Officer,in this behalf, either before the date of retirement,quitting service after re-employment or within sixmonths thereof. On the basis of this information, thebalance at the credit of the subscriber will continue to beretained in the fund beyond the date of retirement,quitting service after re-employment. The period of fiveyears for retention of money should be reckoned fromthe date of actual retirement/ quitting service after re-employment of the officer and not from, the date ofcommencement of leave preparatory to retirement or thedate of exercise of option to retain the money in thefund............... The money retained in the Fund after the date ofretirement/quitting service after re-employment willcontinue to enjoy freedom from attachment by creditors under Section 3 of the Provident Fund Act,1925, andalso exemption from Income tax. (emphasis added)........................ .”A perusal of Regulation 38 would show that anemployee of the Board on quitting service on account of any of theeventualities has an option available. The amount at his credit in theprovident fund may be retained in the fund for a period of five yearsfrom the date of his retirement etc. if the option is exercised within aperiod of six months. In the event of exercising option, the creditbalance of an employee/ subscriber would continue to be retained inthe fund. Regulation further clarifies that the credit balance retainedin the fund after retirement etc. would continue to enjoy freedom fromattachment by the creditors in accordance with the provisions ofSection 3 of the 1925 Act and also exemption from income tax. It hasbeen expressly made clear by regulation 38 that for a period of fiveyears from the date of retirement etc provident fund or interestaccruing on such fund would continue to qualify for exemption fromincome tax. It is pertinent to notice the provisions of Regulation 41 ofthe Regulations which reads as under: “41. All sums paid into the Fund under theseregulations shall be credited in the books of the Board toan account named “The Punjab State Electricity BoardProvident Fund”. Sums of which payment has not beentaken within six months after they become payable underthese regulations shall be transferred to “Deposits” at the end of the year and treated under the ordinary regulationsrelating to deposits.” A perusal of the above Regulation shows that if a subscriberhas failed to take the payment within a period of six months aftersuch payment becomes payable under the Regulation then the creditbalance has to be transferred to 'deposits' at the end of the year and itwould be treated under the ordinary regulation relating to deposits.Regulations 38 and 41 when read together would show that an optioncan be exercised within a period of six months for retention ofprovident fund in the accounts of a subscriber and if no option isexercised then after the period of six months it would loose itscharacter as provident fund and would be transferred to deposits. end of the year and treated under the ordinary regulationsrelating to deposits.” A perusal of the above Regulation shows that if a subscriberhas failed to take the payment within a period of six months aftersuch payment becomes payable under the Regulation then the creditbalance has to be transferred to 'deposits' at the end of the year and itwould be treated under the ordinary regulation relating to deposits.Regulations 38 and 41 when read together would show that an optioncan be exercised within a period of six months for retention ofprovident fund in the accounts of a subscriber and if no option isexercised then after the period of six months it would loose itscharacter as provident fund and would be transferred to deposits. The CBDT had itself clarified by answering the queryof the Board in favour of the assessee. The clarification has come inits letter dated 15.6.2006 which infact puts the issue beyond anycontroversy. The Board in letter dated 17.4.2006 ( Annexure P.5) hasraised the following query: “ Punjab State Electricity Board has framed GP FundRegulations under the provisions of Section 3 of theProvident Fund Act 1925. Regulation 16(4) of ibidRegulation provides as under: “ In addition to any amount to be paid underRegulation 31, 32,37 or under Regulation 38 if aperson has exercised the option under theRegulation interest thereon upto the end of theRegulation 31, 32,37 or under Regulation 38 if aperson has exercised the option under theRegulation interest thereon upto the end of the month preceding that in which the payments madeor upto the end of the six months after the monthin which such amount became payable, which everof these periods be less shall be payable to theperson to whom such amount is to be paid”or upto the end of the six months after the monthin which such amount became payable, which everof these periods be less shall be payable to theperson to whom such amount is to be paid” A question has arisen whether the interest paid after thedate of retirement of the employee under aboveregulation is liable to TDS or not.” (emphasis added)date of retirement of the employee under aboveregulation is liable to TDS or not.” (emphasis added) The CBDT in its letter dated 15.6.2006 ( Annexure P.5 (colly.) has answered the afore-mentioned question by observing as under: “I am directed to refer to your Memo number 6286 dated 22[nd] May, 2006 on the subject mentioned aboveand to clarify that interest on GPF is exempt fromincome tax as per the provisions of section 10(11) of theIncome tax Act,1961. Hence, no TDS is required to bemade from payment of interest on GPF.”and to clarify that interest on GPF is exempt fromincome tax as per the provisions of section 10(11) of theIncome tax Act,1961. Hence, no TDS is required to bemade from payment of interest on GPF.” The reply given by the CBDT clarifies the issue that interest on G.P.F. is exempt from income tax as per the provisions of Section 10(11) of the 1961Act and no TDS is required to be deducted from thepayment of interest on GP Fund after the date of retirement of anemployee. The argument of Mr. Putney, learned counsel for the respondents that Regulation 41 of the Regulations would govern thesituation and the whole credit balance in the provident fund of asubscriber would be considered as 'deposits' has not impressed us because the argument fails to take into account Regulation 38 of theRegulations. It has been provided by Regulation 38, as alreadynoticed above that within a period of six months an option has to beexercised for retention of the credit balance in the provident fundfailing which it would be shifted to 'deposits' and once shifted to'deposits' then it would be governed by the general regulation. If it isretained as provident fund then it would continue to enjoy itscharacter of provident fund without being considered as deposit. Suchan argument is obviously without any substance and the same isrejected. because the argument fails to take into account Regulation 38 of theRegulations. It has been provided by Regulation 38, as alreadynoticed above that within a period of six months an option has to beexercised for retention of the credit balance in the provident fundfailing which it would be shifted to 'deposits' and once shifted to'deposits' then it would be governed by the general regulation. If it isretained as provident fund then it would continue to enjoy itscharacter of provident fund without being considered as deposit. Suchan argument is obviously without any substance and the same isrejected. For the reasons afore-mentioned these petitions succeedand the question posed in the opening para of this judgement isanswered in favour of the assessee. Accordingly notices issued underSection 148 of the 1961 Act pursuant to re-assessment proceedingsare quashed. The respondents are directed to extend the benefit ofexemption from income tax to the interest income that has accrued toan employee of the Board and the credit balance which has beenretained by them by exercising option in their provident fund accountafter their retirement terms of Regulation 38 of the 1960 Regulations. (M.M.Kumar) Judge 4 .4.2008okg (Ajay Kumar Mittal) Judge FIT FOR INDEXING