Sangeeta Kharbanda, Chandigarh V. ITO, Chandigarh

ITA 159/CHANDI/2012

• Counselvise Citation: 15921514 RSA 2012
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Assessee Lawyers: DEEPINDER MALHOTRA
• Keywords: Salary income; Benefit of exemption
• Section: 10; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.159/CHD/2012 (ASSESSMENT YEAR: 2008-09) SMT.SANGEETA KHARBANDA, VS. THE INCOME TAX OFFICE R, CHANDIGARH. WARD-4(1), CHANDIGARH. PAN: ACEPK6082A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPINDER MALHOTRA RESPONDENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 22.03.2012 DATE OF PRONOUNCEMENT : 28.03.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS), CHANDIGARH DA TED 19.12.2011 RELATING TO ASSESSMENT YEAR 2008-09 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS), HAS ERRED IN LAW AS WELL AS FACTS IN UPHOLDING THE ADDITION OF RS.5,00,000/- MADE ON ACCOUNT OF DISALLOWANCE OF EXEMPTION CLAIMED UNDER SECTION 10(10C) OF THE INCOME TAX ACT, 1961. 2. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), IS ARBITRARY AND UNJUSTIFIED AS IT FAILED TO GIVE ANY JUSTIFICATION FOR NOT ACCEPTING THE EXIM OPTION SCHEME OF STATE BANK OF PATIALA UNDER SECTION 10(10C) OF THE INCOME TAX ACT, 1961. 3. THAT THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), IS UNSUSTAINABLE IN THE EYES OF LAW AS IT COMPLETELY IGNORED THE JUDGMENT 2 OF HON'BLE SUPREME COURT AND HIGH COURTS, WHEREBY SIMILAR SCHEMES OF VARIOUS BANKS HAD BEEN GRANTED THE STATUTORY RELIEF PROVIDED UNDER SECTION 10(10C) OF THE INCOME TAX ACT, 1961. THE LD. COMMISSIONER OF INCOME TAX (APPEALS), HAS FURTHER ERRED IN NOT FOLLOWING THE GUIDELINES LAID IN THE SAID JUDGMENT FOR DEALING WITH SUCH SCHEMES. 3. THE LEARNED A.R. FOR THE ASSESSEE FOR THE ASSESS EE AT THE OUTSET POINTED OUT THAT THE ISSUE IN THE PRESENT CASE IS C OVERED BY THE ORDER OF THE TRIBUNAL DATED 9.11.2011 IN THE CASE OF BIKRAM JIT PASSI VS. DCIT IN ITA NO.925/CHD/2011 RELATING TO ASSESSMENT YEAR 200 8-09. 4. THE BRIEF FACTS IN THE CASE ARE THAT THE ASSESSE E WAS AN EMPLOYEE OF STATE BANK OF PATIALA (SBOP) AND HAD OPTED FOR VOLU NTARY RETIREMENT UNDER THE VRS SCHEME (EXIT OPTION SCHEME) FLOATED B Y THE BANK VIDE ITS CIRCULAR NO.PER/15 DATED 30.09.2006. THE ASSESSEE HAD RECEIVED A SUM OF RS.7,97,250/- ON ACCOUNT OF EXGRATIA PAYMENT AND HAD CLAIMED EXEMPTION OF RS.5 LACS UNDER SECTION 10 (10C) OF TH E ACT. THE ASSESSING OFFICER ON PERUSAL OF THE SCHEME OF THE B ANK UNDER WHICH THE ASSESSEE HAD RECEIVED EXGRATIA PAYMENT FOUND THE SA ME TO BE NOT IN ACCORDANCE WITH REQUIREMENTS OF RULE 2BA OF THE INC OME TAX RULES. THE PLEA OF THE ASSESSEE THAT EXGRATIA PAYMENT WAS RECEIVED FOR SURRENDER OF SERVICE AND HENCE NOT CHARGEABLE TO TA X, WAS REJECTED BY THE ASSESSING OFFICER. FURTHER AS THE EMPLOYER BANK HA S ALSO DEDUCTED TAX AT SOURCE FROM THE EXGRATIA PAYMENT, THE SAME WAS H ELD TO BE SALARY INCOME IN THE HANDS OF THE ASSESSEE. 6. THE CIT (APPEALS) UPHELD THE ORDER OF THE ASSESS ING OFFICER. 7. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 10(10C) OF THE ACT AROSE BEFORE CHANDIGARH BENCH OF THE TRIBUNAL IN BIKRAM JIT PASSI VS. DCIT (SUPRA), WHICH IN TURN RE LYING ON THE RATIO LAID DOWN BY AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF PANDYA 3 VINOD CHANDRA BHOGILAC V ITO (2010) 045 DTR 105 ALL OWED THE CLAIM OF THE ASSESSEE. THE AHMEDABAD BENCH OF THE TRIBUN AL HELD AS UNDER: 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. IN OUR CONSIDERED VIEW THE DISTINCTION CIT ED BY THE LEARNED COMMISSIONER (APPEALS) IS NOT SOUND AND DOE S NOT STAND TO REASON. THE ONLY BASIS FOR NOT ALLOWING THE CLA IM HAS BEEN THAT SCHEME FOR VRS IS NOT IN ACCORDANCE WITH RULE 2BA. HOWEVER,, IT HAS NOT BEEN POINTED OUT HOW THE EMPLO YER HAS NOT FRAMED THE SCHEME IN ACCORDANCE WITH RULE 2BA. EAR LIER TILL 2002 SCHEMES WERE REQUIRED TO BE APPROVED BY THE CH IEF COMMISSIONER BUT THEREAFTER SUCH REQUIREMENT HAS BE EN DISPENSED WITH AND, THEREFORE, IT IS ONLY FOR THE E MPLOYER TO FRAME THE SCHEME FOR VRS OR FOR EARLIER EXIT OPTION . IF ASSESSING OFFICER HAD ANY DOUBT ABOUT THE SCHEME HE COULD HAV E ENQUIRED FROM THE EMPLOYER. SO FAR AS THE ASSESSEE EMPLOYEE IS CONCERNED, HE CANNOT BE PENALIZED AND TAX WILL BE L EVIED ON HIM ON THE ASSUMPTION THAT THE SCHEME FRAMED BY EMPLOYE R IS NOT IN ACCORDANCE WITH RULE 2BA. IN ANY CASE, THE JUDGMEN T OF THIRD MEMBER IN DY.CIT V. KRISHNA GOPAL SAHA (SUPRA) IS C LEARLY APPLICABLE AND WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW. FOR THE SAKE OF CONVENIENCE WE REFER TO FOLL OWING PARA FROM THE THIRD MEMBER JUDGMENT IN DY.CIT V. KRISHNA GOPAL SAHAS CASE (SUPRA) AS UNDER : 5. AT THE TIME OF HEARING BEFORE ME, NONE APPEARED ON BEHALF OF THE ASSESSEE-RESPONDENT. I HAVE, THEREFORE, HEARD THE LEARNED DEPARTMENT REPRESENTATIVE AND PERUSED THE MATERIAL PLACED BEFORE ME. I FIND THAT THE ISSUE HAS BEEN CONSIDER ED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SA IL DSP VR EMPLOYEES ASSOCIATION 1998 V. UNION OF INDIA (SUPRA ) IN WHICH THEIR LORDSHIPS HELD AS UNDER : SECTION 10(10C) OF THE INCOME TAX ACT, 1961, USES T HE EXPRESSION ANY AMOUNT RECEIVED BY AN EMPLOYEE. AT THE TIME OF HIS VOLUNTARY RETIREMENT IN ACCORDANCE WITH ANY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT. IF A PLAIN LITERA L INTERPRETATION OF STATUTORY PROVISION PRODUCED A MA NIFESTLY ABSURD AND UNJUST RESULT, WHICH THE LEGISLATURE COU LD NOT HAVE INTENDED, THE COURT IS SUPPOSED TO MODIFY THE LANGU AGE USED BY THE LEGISLATURE EVEN TO DO SOME VIOLENCE TO IT S O AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AN D PRODUCE A RATIONAL CONSTRUCTION. AN EXPRESSION USED IN THE S TATUTE IS NOT ALWAYS TO BE INTERPRETED LITERALLY OR GRAMMATIC ALLY. 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 ENACTE D. SEC.10(10C) WAS INSERTED IN ORDER TO MAKE VOLUNTARY RETIREMENT ATTRACTIVE SO AS TO REDUCE HUMAN COMPLEM ENTS FOR SECURING ECONOMIC VIABILITY OF CERTAIN COMPANIES. THIS OBJECT WAS ELABORATED BY VARIOUS DEPARTMENTAL CIRCU LARS AND EXPLANATORY STATEMENTS ISSUED FROM TIME TO TIME. S IMILARLY, RULE 2BA OF THE INCOME TAX RULES, 1962, WHICH WAS I NSERTED BY IT (SIXTEENTH AMENDMENT) RULES, 1962, WAS AMENDE D FROM TIME TO TIME. ALL THESE GO TO SHOW THAT THIS WAS I NTENDED TO 4 MAKE VOLUNTARY RETIREMENT MORE ATTRACTIVE AND BENEF ICIAL TO THE EMPLOYEE OPTING FOR VOLUNTARY RETIREMENT. THER EFORE, 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 B Y REASON OF SECTION 10(10C). EVEN IF THE PAYMENT IS STRETCH ED OVER A PERIOD OF YEARS, THE SAME WOULD NOT BECOME CHARGEAB LE 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, WH O TAKES VOLUNTARY RETIREMENT, IS ENTITLED TO DEDUCTION UNDE R SECTION 10(10C) EVEN IF THE PAYMENT IS STRETCHED OVER A PER IOD OF YEARS. THEY HAVE ALSO HELD THAT PROVISION OF SECTI ON 10(10C) SHOULD BE INTERPRETED IN A MANNER BENEFICIAL TO THE OPTEE FOR VOLUNTARY RETIREMENT. IT MAY BE POINTED OUT THAT I N THE ABOVE-MENTIONED CASE, THE EMPLOYER I.E. SAIL WAS OF THE OPINION THAT THE EMPLOYEES WERE NOT ENTITLED TO EXE MPTION UNDER SECTION 10(10C) AND ACCORDINGLY, SAIL HAD BEE N DEDUCTING TAX AT SOURCE ON THE AMOUNT PAID UNDER TH EIR VOLUNTARY RETIREMENT SCHEME. THE FACTS ARE SIMILAR IN THE ASSESSES CASE, BECAUSE IN THE CASE OF THE ASSESSEE ALSO, THE EMPLOYER BELIEVING THAT THE ASSESSEE IS NOT ENTITLE D TO DEDUCTION UNDER SECTION 10(10C) HAS DEDUCTED TAX AT SOURCE ON THE AMOUNT PAID ON VOLUNTARY RETIREMENT. THE FA CTS BEING IDENTICAL, THE ABOVE DECISION OF HON'BLE JURISDICTI ONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE UNDE R APPEAL BEFORE THE TRIBUNAL. 6. SIMILARLY, HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. NAGESH DEVIDAS KULKARNI (SUPRA) HELD AS UNDER : THE ASSESSEE IS ENTITLED TO THE EXEMPTION UNDER SEC TION 10(10C) OF THE ACT AND ALSO REBATE UNDER SECTION 89 OF THE ACT IN RESPECT OF THE AMOUNT 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 E XEMPTION UNDER SECTION 10(10C) BUT ALSO REBATE UNDER SECTION 89 OF THE INCOME TAX ACT. SIMILAR VIEW IS TAKEN BY THE HON'B LE KARNATAKA HIGH COURT IN THE CASE OF CIT V. P. SUREN DRA PRABHU (SUPRA) WHEREIN THEIR LORDSHIPS HELD AS UNDE R : THAT THE ASSESSEE, EMPLOYEE OF THE RESPONDENT BANK WAS NOT ONLY ENTITLED TO THE BENEFIT OF EXEMPTION UNDER SECTION 10(10C) OF THE ACT TO THE EXTENT PRESCRIBED IN THE PROVISION ITSELF BUT FOR ANY AMOUNT OVER AND ABOVE THE PRESCR IBED LIMIT; UNDER THE AFORESAID PROVISION, THE ASSESSEE WAS ALS O ENTITLED TO RELIEF UNDER SECTION 89(1) OF THE ACT READ WITH RULE 21A. 6. FROM THE ABOVE IT IS EVIDENT THAT WHILE THE L EARNED AM RELIED UPON THE DECISION OF HON'BLE MADRAS HIGH COURT IN T HE CASE OF CIT V. M.CHELLADURAI & ORS. (2009) 317 ITR 370(M AD) : (2009) 176 TAXMAN 31, HE HAS NOT TAKEN INTO ACCOUNT THE DECISIONS OF OTHER HIGH COURTS INCLUDING THE JURISD ICTIONAL 5 HIGH COURT. THE HON'BLE JURISDICTIONAL HIGH COURT UNDER THE IDENTICAL FACTS HELD THE ASSESSEE, I.E., THE RETIRE D EMPLOYEE, TO BE ENTITLED TO DEDUCTION UNDER SECTION 10(10C). SI MILAR VIEW IS TAKEN BY HON'BLE BOMBAY AS WELL AS KARNATAKA HIG H COURTS. THE DECISION OF HON'BLE JURISDICTIONAL HIG H COURT IS BINDING UPON US AND MOREOVER IF TWO VIEWS ARE POSSI BLE, WHILE INTERPRETING THE PROVISION, A VIEW WHICH IS F AVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED. HON'BLE JURISD ICTIONAL HIGH COURT IN THE ABOVE-REFERRED CASE OF SAIL DSP V R EMPLOYEES ASSOCIATION 1998 V. UNION OF INDIA (SUPRA ) HAS ALSO HELD THAT THE PROVISIONS OF SECTION 10(10C) AR E TO BE INTERPRETED LIBERALLY IN A MANNER WHICH IS BENEFICI AL TO RETIRED EMPLOYEES IN VIEW OF THE ABOVE. I RESPECTF ULLY FOLLOWING THE DECISIONS OF HON'BLE JURISDICTIONAL H IGH COURT, BOMBAY HIGH COURT AND KARNATAKA HIGH COURT AGREE WI TH THE LEARNED JM AND HOLD THAT THE ASSESSEE IS ENTITLED T O EXEMPTION UNDER SECTION 10(10C) TO THE EXTENT OF RS.5 LAKHS. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL, WE ALLOW THE CLAIM OF ASSESSEE. 8. THE ISSUE RAISED IN THE PRESENT APPEAL BEFORE US IS IDENTICAL TO THE ISSUE RAISED BEFORE THE AHMEDABAD BENCH OF THE TRIB UNAL IN THE CASE OF PANDYA VINOD CHANDRA BHOGILAC V ITO (SUPRA), WHICH WAS FOLLOWED BY THE CHANDIGARH BENCH IN BIKRAM JIT PASSI VS. DCIT ( SUPRA). FOLLOWING THE ABOVE SAID RATIO WE HOLD THAT THE ASSESSEE IS E NTITLED TO THE CLAIM OF EXEMPTION UNDER SECTION 10(10C) OF THE ACT AMOUNTIN G TO RS.5 LACS. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWE D. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH MARCH, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6