The Central Board of Direct Taxes (CBDT) has rejected Britannia Industries’ petition to change the pension fund rules, that had earlier been denied by the statutory authority, Commissioner of Income Tax-III, Kolkata in June 2008.
The CBDT rejected it on the grounds that it “has been made effective retrospectively but this will adversely affect the rights of the employees from a prior date, which is beyond the amending power vested in Clause 4 of the principal deed and Rule 27 of the trust rules”.
Britannia Industries’ Fund Trustees had appealed to CBDT against this rejection of the two deeds of variation seeking changes to the fund rules by the Commissioner.
Britannia Industries, among the largest food companies in India, had applied to the Commissioner of Income Tax-III, Kolkata in November 2004 to change the pension rules with retrospective effect and bring into effect Defined Contribution Scheme from the existing prevalent Defined Benefit Scheme.
Members of Pensioners Welfare Association (approx 220+), who retired from Britannia Industries have been fighting a protracted legal battle with Britannia Industries against this retrospective change, contrary to their terms of service and promises made.
According to the pensioners, the proposals went against the trust fund objectives and rules. They had claimed that this would drastically affect the pensioners and it would very substantially reduce the accumulated benefits during the entire service period, to a fraction (in many case to less than a quarter of the amount due) of the eligible pensions, and would also take away the benefits available to the spouse and children of a deceased pensioner — as had been provided in the fund rules.
As reported earlier, Britannia had stopped paying pensions to the retiring officers and managers from April 2004, and the City Civil Court, Bangalore had granted a small interim amount that Britannia was willing to release as per order of January 1, 2009.
