Shri Anil V. Barde, Pune V. Income-tax Officer, Pune

ITA 1460/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9799 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Additional evidence
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI R.K. PANDA, ACCOUNTANT MEMBER I.T.A. NO.1460/PN/2011 : A.Y. 2006-07 SHRI ANIL V. BARDE 208 RADHA BUILDING SHRIKRISHNANAGAR, 13-3 NDA, PASHAN, BAVDHAN, PUNE-411 021 PAN ABAPB 7134 P : APPELLANT VS. I.T.O. WARD 7(2) PUNE : RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY: MS. ANN KAPTHUAMA DATE OF HEARING: 16-11-2012 DATE OF PRONOUNCEMENT: 23-11-2012 ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)III PUNE DATED 31-3-2011 FOR THE A.Y. 2006-07 CONFIRMING THE ORDER DATED 9-9-2009 PASSED BY THE A.O U/S 154 OF THE ACT. 2. IN THE PRESENT CASE, THE ASSESSEE WAS IN SERVICE WITH THE STATE BANK OF INDIA AND TOOK VOLUNTARY RETIREME NT FROM SERVICE, ON WHICH HE RECEIVED EX-GRATIA / COMPENSATION PAYMENT OF RS. 5,00,000/-. ACCORDING TO THE ASSESSEE, EVEN THOUGH THE SAID EX GRATIA PAYMEN T WAS EXEMPT BY VIRTUE OF SEC. 10(10C) OF THE ACT, THE BA NK DEDUCTED TAX AT SOURCE FROM THE SAID PAYMENT WITHOU T CONSIDERING THE ADMISSIBILITY OF EXEMPTION U/S 10(1 0) OF THE ACT. AGGRIEVED, CERTAIN EMPLOYEES LIKE THOSE OF THE PRESENT ASSESSEE, APPROACHED THE JURISDICTIONAL HIG H COURT WHICH GAVE A DECISION IN FAVOUR OF SUCH EMPLOYEES. ON SIMILAR LINES, THE ASSESSEE MOVED AN ITA NO. 1460/PN/11 ANIL V ARDE A.Y. 2006-07 , 2 APPLICATION U/S 154 OF THE ACT BEFORE THE AO SEEKIN G TO GRANT EXEMPTION U/S 10(10) OF THE ACT IN RESPECT OF SUCH EX-GRATIA AMOUNT. HOWEVER, THE SAME WAS REJECTED B Y THE AO. THE CIT(A) HAS ALSO CONFIRMED THE ACTION OF THE AO. 3. HAVING HEARD THE PARITIES AND PERUSING THE MATER IAL ON RECORD, WE FIND THAT THE CIT(A) WAS NOT JUSTIFIE D IN UPHOLDING THE ACTION OF THE AO. ON MERITS, WE FIND THAT THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . KOODATHIL KALLYATAN AMBUJAKSHAN (2009) 309 ITR 113 WHEREIN THE AMOUNT RECEIVED UNDER OPTIONAL EARLY RETIREMENT SCHEME, WHICH IS FLOATED BY RBI WAS HELD TO BE APPLICABLE TO ALL THE EMPLOYEES WHO HAVE SERVED FOR 25 YEARS AND HAD ATTAINED THE AGE OF 50 YEARS. IT WAS AIMED AT REDUCTION IN THE EXISTING STRENGTH OF EMPLOYEES AND VACANCIES CAUSED WERE NOT FILLED UP. THE QUESTION O F EMPLOYING RETIRED EMPLOYEES WITH ANOTHER CONCERN OF SAME MANAGEMENT DID NOT ARISE AS RBI HAD NONE. IN THIS BACKGROUND, IT WAS HELD AS UNDER: FIRSTLY THE OERS SATISFIES THE FIRST TEST OF R. 2BA NAMELY 10 YEARS OF SERVICE AND 40 YEARS OF AGE. IN THE INSTANT CASE IT IS 25 YEARS OF SERVICE AND 50 YEARS OF AGE. SECONDLY IT APPLIES TO ALL EMPLOYEES. THIS MEETS THE SECOND REQUIREMENT. THE THIRD REQUIREMENT IS THAT THE SCHEME HAS BEEN DRAWN TO RESULT IN OVERALL REDUCTION IN THE EXISTING STRENGTH OF THE EMPLOYEES. THIS HAS NOT BEEN EXPRESSLY STATED IN THE SCHEME. HOWEVER, THE OBJECT BEHIND S. 10(10C) AND THE NOTE PUT UP BEFORE THE GOVERNOR AT THE TIME WHEN THE SCHEME WAS FRAMED HAS TO NOTED. THE MATERIAL ON RECORD WOULD INDICATE THAT THE EMPLOYEES HAD BEEN RENDERED SURPLUS ON ACCOUNT OF VARIOUS STEPS TAKEN BY THE EMPLOYER. THE SCHEME, THEREFORE, WAS MEANT FOR AN OVERALL REDUCTION IN THE EXISTING STRENGTH OF THE EMPLOYEES. THE THIRD REQUIREMENT IS ALSO, THEREFORE, SATISFIED. THE FOURTH REQUIREMENT WAS THE VACANCY CAUSED BY THE VOLUNTARY RETIREMENT OR VOLUNTARY SEPARATION IS NOT TO BE FILLED UP. A FINDING OF FACT HAS BEEN RECORDED BY THE TRIBUNAL ON THAT COUNT WHICH IS NOT CHALLENGED IN TERMS OF THE QUESTIONS OF LAW AS FRAMED BY THE REVENUE. SECONDLY THERE WAS ITA NO. 1460/PN/11 ANIL V ARDE A.Y. 2006-07 , 3 MATERIAL ON RECORD WHICH SHOWS THAT THE SCHEME BASICALLY WAS TO REDUCE THE EMPLOYEE STRENGTH AS POSTS HAD BECOME SURPLUS ON ACCOUNT OF REORGANIZATION. ONE CANNOT FILL IN THE POSTS WHICH HAVE BECOME SURPLUS AS THE POSTS HAVE BECOME REDUNDANT. ALSO ADDITIONAL EVIDENCE TAKEN ON RECORD UNDER S. 260A(7) WOULD SHOW THAT NONE OF THESE POSTS FROM THE DAY THE SCHEME CAME INTO FORCE TILL 2008 HAVE BEEN FILLED IN. IN OTHER WORDS THE FOURTH REQUIREMENT HAS ALSO BEEN SATISFIED. INSOFAR AS THE FIFTH REQUIREMENT IS CONCERNED, THE TRIBUNAL HAS ALREADY ANSWERED THE ISSUE AND THAT FINDING OF FACT IS NOT IN ISSUE. EVEN OTHERWISE CONSIDERING THAT THE RBI IS A STATUTORY BODY CREATED UNDER AN ACT THERE IS NO OTHER COMPANY OR CONCERN BELONGING TO THE SAME MANAGEMENT. THE FIFTH REQUIREMENT HAS ALSO BEEN SATISFIED. THE SIXTH REQUIREMENT HAS ALSO BEEN SATISFIED AS IN THE INSTANT CASE WHAT IS OFFERED IS TWO MONTHS SALARY FOR EACH COMPLETED YEAR OF SERVICE. THUS THE SCHEME EXPRESSLY OR IMPLIEDLY SATISFIED ALL THE REQUIREMENTS OF THE SECTION AS WELL AS THE GUIDELINES FRAMED FOR THE PURPOSE OF S. 10(10C) NAMELY, R. 2BA. THE CBDT CIRCULAR DT. 26TH SEPT. OCT., 2005 TOOK NOTE OF THE LETTER WRITTEN BY THE RBI. THAT LETTER BY ITSELF WOULD NOT BE OF MUCH CONSEQUENCES AS THE OERS ITSELF NOTES THAT INCOME-TAX IF ANY WOULD BE PAYABLE BY THE EMPLOYEE. EVEN IN THE NOTE PUT UP BY THE DEPARTMENT FOR INTRODUCTION OF THE SCHEME FOR CONSIDERATION OF THE GOVERNOR IT WAS MADE CLEAR THAT IF ANY INCOME-TAX IS PAYABLE THAT WILL BE PAID BY THE EMPLOYEE AND IT WAS FURTHER MADE CLEAR THAT THE PAYMENT IS SUBJECT TO PROVISIONS OF S. 10(10C). THE LETTER, THEREFORE, BY RBI BY ITSELF WOULD NOT BE DETERMINATIVE AS TO WHETHER THE INCOME IS LIABLE TO TAX. ONE HAS TO SEE THE SCHEME FRAMED IN TERMS OF S. 10(10C) AND WHETHER IT SATISFIES THE GUIDELINES IN TERMS OF R. 2BA. THE COURT IS NOT PRECLUDED TO CONSIDER THE ISSUE IRRESPECTIVE OF THE CBDT CIRCULAR. ON EXAMINATION OF THE ISSUE IT WOULD BE CLEAR THAT THE GUIDELINES HAVE TO BE READ IN CONFORMITY WITH THE, STATUTORY PROVISIONS. ON THE FACTS IN THE INSTANT CASE, THE TRIBUNAL HAS RECORDED A FINDING THAT THE PREDICATES OF THE RULE HAVE BEEN SATISFIED. ON A PROPER CONSTRUCTION OF THE RULES THAT THE SCHEME ITSELF MAY NOT EXPRESSLY STATE ALL THE TERMS AS IT IS POSSIBLE FOR THE COURT TO READ THE IMPLIED TERMS OF THE SCHEME. IN THE INSTANT CASE THEY HAVE BEEN SO READ.-CIT VS. HERO CYCLES (P) LTD. (1997) 142 CTR (SC) 122 : (1997) 228 ITR 463 (SC), UCO BANK VS. CIT (1999) 154 CTR (SC) ITA NO. 1460/PN/11 ANIL V ARDE A.Y. 2006-07 , 4 88 : (1999) 237 ITR 889 (SC), CST VS. INDRA INDUSTRIES (2001) 168 CTR (SC) 50 : (2001) 248 ITR 338 (SC) AND CIT VS. GWALIOR RAYON SILK MILL MFG. CO. LTD. (1992) 104 CTR (SC) 243 4. FOLLOWING THE AFORESAID PRECEDENT, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO GRANT EXEM PTION U/S 10(10) OF THE ACT TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER 2012. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE,DATED THE 23 RD NOVEMBER 2012 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT- III PUNE (4) CIT(A)- III PUNE (5) THE D.R. ITAT PUNE A BENCH, PUNE TRUE COPY BY ORDER, SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE