Shri Vinodchandra Bhogilal Pandya, Gandhinagar V. The Income tax Officer,Ward-4, Gandhinagar

ITA 1492/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5534 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-07-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K PATEL
• Assessee Lawyers: K M MAHESH
• Keywords: Benefit of exemption

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI MUKUL SHRAWAT, JM AND D.C.AGRAWAL, AM SHRI PANDYA VINODCHANDRA BHOGILAL, PLOT NO.167/1, SECTOR- 1B, GANDHINAGAR. VS. INCOME-TAX OFFICER, WARD-4, GANDHINAGAR. (APPELLANT) .. (RESPONDENT) REVENUE BY :- SHRI M. K. PATEL, AR ASSESSEE BY:- SHRI K. M. MAHESH, SR.DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FOL LOWING GROUNDS :- (1) THAT ON FACTS AND IN LAW, THE LD. CIT(A) HAS GRIEVO USLY ERRED IN HOLDING THAT ASSESSEES CLAIME U/S 10(10C) OF THE A CT IS NOT COVERED BY THE ITAT, KOLKATA DECISION WITHOUT VERIF YING THE ASSESSEES SCHEME OF VRS. (2) THAT ON FACTS AND IN LAW, THE LD. CIT(A) HAS GRIEVO USLY ERRED THAT UNSIGNED NOTICE U/S 156 OF THE ACT AS APPELLANT FIL ED AN APPEAL INDIRECTLY MEANS ACCEPTANCE OF EXISTENCE DEMAND. 2. THUS THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ABOUT ALLOWABILITY OF EXEMPTION UNDER SECTION 10(10C) OF THE I.T. ACT, 19 61. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A DY. MANAGER IN STATE BANK OF INDIA AND HAS TAKEN V.R.S. ON 31.05.2006 UN DER EXIT OPTION SCHEME INTRODUCED BY THE BANK OF INDIA W.E.F. 7.5.2 005. THE ASSESSEE ITA NO.1492/AHD/2010 ASST. YEAR :2007-08 ITA NO.1492/AHD/2010 ASST. YEAR 2007-08 2 RECEIVED SALARY AND PENSION AMOUNTING TO RS. 3,81,8 94/- (INCLUDING EX- GRATIA). ON EXAMINATION OF FORM NO.16 THE AO NOTICE D THAT ASSESSEE RECEIVED EX-GRATIA OF RS.3,07,236/- ON VRS. HE CLAI MED EXEMPTION UNDER SECTION 10(10C) OF THE ACT. THE AO DISALLOWED THE C LAIM BY FOLLOWING CIRCULAR NO.CCIT BARODA LETTER BRD/CCIT/TECH/MICS/1 0(10C)/09- 10DT 17/06/2006. THE ASSESSEE RELIED ON THE DECISIO N OF ITAT, KOLKATA IN THE CASE OF DCIT VS. KRISHNAGOPAL SAHA 29 DTR 38 5 (KOL) (TM) BUT THE LD. AO DID NOT AGREE AND MADE THE ADDITION. THE LD. CIT(A) ALSO CONFIRMED THE DISALLOWANCE BY TRYING TO DISTINGUISH THE DECISION OF 3 RD MEMBER IN DCIT VS. KRISHNAGOPAL SAHAS CASE. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. IN OUR CONSIDERED VIEW THE DISTINCTION CITED BY THE LD . CIT(A) IS NOT SOUND AND DOES NOT STAND TO REASON. THE ONLY BASIS FOR NO T ALLOWING THE CLAIM HAS BEEN THAT SCHEME FOR VRS IS NOT IN ACCORDANCE W ITH RULE 2BA. HOWEVER, IT HAS NOT BEEN POINTED OUT HOW THE EMPLOY ER HAS NOT FRAMED THE SCHEME IN ACCORDANCE WITH RULE 2BA. EARLIER TIL L 2002 SCHEMES WERE REQUIRED TO BE APPROVED BY THE CHIEF COMMISSIONER B UT THEREAFTER SUCH REQUIREMENT HAS BEEN DISPENSED WITH AND, THEREFORE, IT IS ONLY FOR THE EMPLOYER TO FRAME THE SCHEME FOR VRS OR FOR EARLIER EXIST OPTION. IF AO HAD ANY DOUBT ABOUT THE SCHEME HE COULD HAVE ENQUIR ED FROM THE EMPLOYER. SO FAR AS THE ASSESSEE EMPLOYEE IS CONCER NED, HE CANNOT BE PENALIZED AND TAX WILL BE LEVIED ON HIM ON THE ASSU MPTION THAT THE SCHEME FRAMED BY EMPLOYER IS NOT IN ACCORDANCE WITH RULE 2BA. IN ANY CASE, THE JUDGMENT OF THIRD MEMBER IN DCIT VS. KRIS HNAGOPAL SAHA (SUPRA) IS CLEARLY APPLICABLE AND WE DO NOT FIND AN Y REASON TO TAKE A DIFFERENT VIEW. FOR THE SAKE OF CONVENIENCE WE REFE R TO FOLLOWING PARAGRAPH FROM THE THIRD MEMBER JUDGEMENT IN KRISHN AGOPAL SAHAS CASE AS UNDER :- ITA NO.1492/AHD/2010 ASST. YEAR 2007-08 3 5. AT THE TIME OF HEARING BEFORE ME, NONE APPEAR ED ON BEHALF OF THE ASSESSEE- RESPONDENT. I HAVE, THEREFORE, HEARD THE LD. DR AND PERUSED THE MATERIAL PLACED BEFORE ME. I FIND THAT THE ISSUE HAS BEEN CONSIDERE D BY THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF SIL DSP VR EMPLOYEES ASSO CIATION 1998 VS. UNION OF INDIA (SUPRA) IN WHICH THEIR LORDSHIPS HELD AS UNDE R :- SECTION 10(10C) OF THE IT ACT, 1961, USES THE EXPR ESSION ANY AMOUNT RECEIVED BY AN EMPLOYEEAT THE TIME OF HIS VOLUNTARY RETIREM ENT IN ACCORDANCE WITH ANY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT.IF A PL AIN LITERAL INTERPRETATION OF STATUTORY PROVISION PRODUCED A MANIFESTLY ABSURD AN D UNJUST RESULT, WHICH THE LEGISLATURE COULD NOT HAVE INTENDED, THE COURT IS S UPPOSED TO MODIFY THE LANGUAGE USED BY THE LEGISLATURE EVEN TO DO SOME VIOLENCE TO IT SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. AN EXPRESSION USED IN THE STATUTE IS NOT ALWAYS TO BE INTERPRETED LITERALLY OR GRAMMATICALLY. SOMETIMES IT HAS TO BE INTERPRETED HAVING REGARD TO THE CONTEXT IN WHICH THE EXPRESSION IS USED AND HAVING REGARD TO THE OBJECT AND PURPOSE FOR WHICH THE SAME IS ENACTED. SECTION 10(10C) WAS INSERTED IN OR DER TO MAKE VOLUNTARY RETIREMENT ATTRACTIVE SO AS TO REDUCE HUMAN COMPLEM ENTS FOR SECURING ECONOMIC VIABILITY OF CERTAIN COMPANIES. THIS OBJECT WAS ELA BORATED BY VARIOUS DEPARTMENTAL CIRCULARS AND EXPLANATORY STATEMENTS I SSUED FROM TIME TO TIME. SIMILARLY, R.2BA OF THE IT RULES, 1962, WHICH WAS I NSERTED BY IT (SIXTEENTH AMENDMENT) RULES, 1962, WAS AMENDED FROM TIME TO TI ME. ALL THESE GO TO SHOW THAT THIS WAS INTENDED TO MAKE VOLUNTARY RETIREMENT MORE ATTRACTIVE AND BENEFICIAL TO THE EMPLOYEE OPTING FOR VOLUNTARY RETIREMENT. TH EREFORE, THIS HAS TO BE INTERPRETED IN A MANNER BENEFICIAL TO THE OPTEE FOR VOLUNTARY RETIREMENT, IF THERE IS ANY AMBIGUITY. . SUMS PAID ON VOLUNTARY RETIREMENT TO THE EXTENT OF RUPEES FIVE LAKHS ARE EXEMPTED FROM BEING CHARGED TO TAX BY REASON OF S.10(10C). E VEN IF THE PAYMENT IS STRETCHED OVER A PERIOD OF YEARS, THE SAME WOULD NOT BECOME C HARGEABLE TO TAX IN ANY SUBSEQUENT ASSESSMENT YEAR. FROM THE ABOVE IT IS EVIDENT THAT THEIR LORDSHIPS O F THE JURISDICTIONAL HIGH COURT HELD THAT AN EMPLOYEE, WHO TAKES VOLUNTARY RETIREME NT, IS ENTITLED TO DEDUCTION U/S 10(10C) EVEN IF THE PAYMENT IS STRETCHED OVER A PER IOD OF YEARS. THEY HAVE ALSO HELD THAT PROVISION OF SEC.10(10C) SHOULD BE INTERP RETED IN A MANNER BENEFICIAL TO THE OPTEE FOR VOLUNTARY RETIREMENT. IT MAY BE POINT ED OUT THAT IN THE ABOVE MENTIONED CASE, THE EMPLOYER I.E. SAIL WAS OF THE O PINION THAT THE EMPLOYEES WERE NOT ENTITLED TO EXEMPTION UNDER S.10(10C) AND ACCOR DINGLY, SAIL HAD BEEN DEDUCTING TAX AT SOURCE ON THE AMOUNT PAID UNDER TH EIR VOLUNTARY RETIREMENT SCHEME. THE FACTS ARE SIMILAR IN THE ASSESSEES CAS E, BECAUSE IN THE CASE OF THE ASSESSEE ALSO, THE EMPLOYER BELIEVING THAT THE ASSE SSEE IS NOT ENTITLED TO DEDUCTION UNDER S.10(10C) HAS DEDUCTED TAX AT SOURCE ON THE A MOUNT PAID ON VOLUNTARY RETIREMENT. THE FACTS BEING IDENTICAL, THE ABOVE DE CISION OF HON. JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE UNDER APPEAL BEFORE THE TRIBUNAL. ITA NO.1492/AHD/2010 ASST. YEAR 2007-08 4 6. SIMILARLY, HON. BOMBAY HIGH COURT IN THE CASE OF CIT VS. NAGESH DEVIDAS KULKARNI (SUPRA) HELD AS UNDER : THE ASSESSEE IS ENTITLED TO THE EXEMPTION UNDER S. 10(10C) OF THE ACT AND ALSO REBATE UNDER S.89 OF THE ACT IN RESPECT OF THE AMOU NT RECEIVED IN EXCESS OF RS.5,00,000/- ON ACCOUNT OF VOLUNTARY RETIREMENT. THUS THEIR LORDSHIPS HAVE HELD THAT THE ASSESSEE, W HO OPTS FOR VOLUNTARY RETIREMENT, IS NOT ONLY ENTITLED TO EXEMPTION UNDER S.10(10C) BUT ALSO REBATE UNDER S.89 OF THE IT ACT. SIMILAR VIEW IS TAKEN BY THE HO NBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. P. SURENDRA PRABHU (SUPRA) WHER EIN THEIR LORDSHIPS HELD AS UNDER : THAT THE ASSESSEE, EMPLOYEE OF THE RESPONDENT-BANK WAS NOT ONLY ENTITLED TO THE BENEFIT OF EXEMPTION UNDER S.10(10C) OF THE ACT TO THE EXTENT PRESCRIBED IN THE PROVISION ITSELF BUT FOR ANY AMOUNT OVER AND ABOVE THE PRESCRIBED LIMIT UNDER THE AFORESAID PROVISION, THE ASSESSEE WAS ALSO ENTITLED TO RELIEF UNDER S.89(1) OF THE ACT R.W.R.21A. 7. FROM THE ABOVE IT IS EVIDENT THAT WHILE THE LD. AM RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M. CHELLADURAI & ORS. (2008) 5 DTR (MAD) 201, HE HAS NOT TAKEN INTO ACCOUNT THE DECISIONS OF OTHER HIGH COURTS INCLUDING THE JURISDICTIONAL HIGH COURT. THE HONBLE JURISDICTIONAL HIGH COURT UNDER THE IDENTICAL FACTS HELD THE ASSESSEE, I.E. THE RETIRED EMPLOYEE, TO BE ENTITLED TO DEDUCTION UNDER S.10(10C). SIMILAR VIEW IS TAKEN BY HON. BOMBAY AS WELL AS KARNATAKA HIGH COURTS. THE DECISION OF HON. JURISDICTIONAL HIGH COURT IS BINDING UPON US AND MORE OVER IF TWO VIEWS ARE POSS IBLE WHILE INTERPRETING THE PROVISION, A VIEW WHICH IS FAVOURABLE TO THE ASSESS EE HAS TO BE ADOPTED. HON. JURISDICTIONAL HIGH COURT IN THE ABOVE REFERRED CAS E OF SAIL DSP VR EMPLOYEES ASSOCIATION 1998 VS. UNION OF INDIA (SUPRA) HAS ALS O HELD THAT THE PROVISIONS OF S.10(10C) ARE TO BE INTERPRETED LIBERALLY IN A MANN ER WHICH IS BENEFICIAL TO RETIRED EMPLOYEES IN VIEW OF THE ABOVE. I RESPECTFULLY FOLL OWING THE DECISIONS OF HON. JURISDICTIONAL HIGH COURT, BOMBAY HIGH COURT AND KA RNATAKA HIGH COURT AGREE WITH THE LD. JM AND HOLD THAT THE ASSESSEE IS ENTIT LED TO EXEMPTION UNDER S.10(10C) TO THE EXTENT OF RS. 5 LAKHS. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL, WE ALLOW THE CLAIM OF ASSESSEE. ITA NO.1492/AHD/2010 ASST. YEAR 2007-08 5 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER WAS PRONOUNCED IN OPEN COURT ON 30/7/2010 SD/- SD/- (MUKUL SHRAWAT) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 30/7/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD