BUSINESS STANDARD Article on Jan 1st, 2008

BUSINESS STANDARD Article on Jan 1st, 2008

 

HC asks Britannia to return pension money

 

Ruchita Saxena / Mumbai January 1, 2008

 

Firm had challenged an Income Tax dept show cause notice on why it withdrew such a huge amount from the employees' fund.

 

Britannia Industries (BIL) has been asked by the Calcutta High Court to pay back the Rs 12 crore it allegedly withdrew from the company's pension fund. BIL had received a show cause notice from the income tax department to explain the withdrawal in 2003.

 

The directive was challenged by Britannia in the high court. However, the HC passed an order turning down BIL's appeal. The company declined to comment when contacted.

 

The commissioner of income tax Kolkata had issued the notice to the trustees of BIL Covenanted Staff Pension Fund in April 2007.

 

The I-T department's action came four years after a large number of officers and managers, who retired after April 1, 2003 from Britannia, stopped receiving pensions. Under the provisions of Rule 91 (2) of the Income Tax Rules, 1962, a company can under no circumstances withdraw from a pension fund.

 

This withdrawal has been cited by the pensioners as the prime reason for them being denied pensions. The pensioners had also filed a complaint with the Institute of Chartered Accountants of India (ICAI) against auditors CC Choksi and Co for endorsing a transaction through which Britannia withdrew the money in the financial year 2003-04. The ICAI verdict is awaited.

 

After the I-T department issued a notice, BIL filed a writ petition challenging the notice in court. Justice Aniruddha Bose had passed the order, dated October 15, 2007, asking Britannia to deposit the amount within a period of four weeks from the date of the order.

 

BIL, however, appealed against the order. In response to the appeal, Justice Pinaki Ghose and Justice Ashim Kumar Roy passed an order making it clear that the amount was directed to be deposited by the Hon'ble First Court which has to be given effect to. Such an amount is to be deposited, since the time has already expired, with any nationalised bank within a period of four weeks from the date.

 

According to the orders, if BIL does not refund the money, the income tax authorities may even deregister the trust. Britannia, sources say, might appeal against this order in the Supreme Court.

 

The Calcutta High Court judgment is crucial for BIL pensioners who are slugging it out in court with the company to get their due pensions. Some of these pensioners have passed away.

 

The company, earlier this year, had given an ex-gratia offer to the Britannia Industries Pensioners Welfare Association (PWA) to meet the shortfalls in the proposed pension scheme. This offer, however, was rejected by the PWA members, who are seeking payment through LIC Annuity.