Shri Nanubhai Jivanji Patel, Valsad V. The ACIT.,Valsad Circle, Valsad

ITA 2255/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6249 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 22-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHRY
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI D.K. TYAGI, HONBLE JUDICIAL MEMBER AND SHRI A.N.PHAUJA, HONBLE ACCOUNTANT MEMBER ITA NO.2255/AHD/2009 ASSESSMENT YEAR:2004-05 DATE OF HEARING:28.6.11 DRAFTED:29.6.11 SHRI NANUBHAI JIVNJI PATEL, 207, S/F, VOGESHWAR NAGAR, KRISHNA APARTMENT, KOSAMBA ROAD, VALSAD 396 001 PAN NO.AEZPP2265F V/S. COMMISSIONER OF INCOME-TAX, OFFICE OF CIT, VALSAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE RESPONDENT BY:- SHRI M.R. CHAUDHRY, DR O R D E R PER D.K. TYAGI, JUDICIAL MEMBER:- THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF COM MISSIONER OF INCOME-TAX (APPEALS)-I, SURAT IN APPEAL NO.CAS-I(V) /22/08-09 FOR THE ASSESSMENT YEAR 2004-05. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF LD. CIT(A) WHO HAS DENIED HIM THE RELIEF U/S.89(1) OF T HE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA D CLAIMED RELIEF OF RS.25,691/- U/S.89(1) OF THE ACT IN RESPECT OF AMOU NT EXCEEDING RS.5 LAKH RECEIVED ON VOLUNTARY RETIREMENT COMPENSATION. THE ASSESSEE HAD RECEIVED RS.9,75,758/- FROM HIS EMPLOYER UNDER VRS SCHEME. T HE ASSESSEE CLAIMED EXEMPTION OF RS.5 LAKH U/S.10(10C) OF THE ACT AND O N THE BALANCE AMOUNT THE ASSESSEE CLAIMED RELIEF AS PER THE PROVISIONS OF SE CTION 89(1) OF THE ACT. THE ITA NO.2255/AHD/2009 A.Y. 2004-05 SH NANUBHAI J PATEL V. CIT, VALSAD PAGE 2 ASSESSING OFFICER ALLOWED UPTO RS.5 LAKH U/S.10(10C ) OF THE ACT HOWEVER, HE DENIED RELIEF U/S.89(1) OF THE ACT BECAUSE THE VRS DOES NOT CONSIDER AS SALARY PAID IN ARREAR OR IN ADVANCE. THE VRS IS THE ONE TI ME PAYMENT AND THERE IS NO CONTINUITY AND NOT A SALARY IN ARREAR OR IN ADVANCE . 3. BEFORE LD. CIT(APPEALS) THE CONTENTION OF THE AS SESSEE WAS THAT IT WAS A PROFIT IN LIEU OF SALARY AND ON THE AMOUNT IN EXC ESS OF RS.5 LAKH CLAIMED AS DEDUCTION U/S.120(10C) OF THE ACT, AND RELIEF U/S.8 9(1) SHOULD BE GIVEN. HOWEVER, LD. CIT(APPEALS) CONFIRMED THE ACTION OF T HE ASSESSING OFFICER BY HOLDING THAT VRS COMPENSATION IS NOT A SALARY IN AR REARS OR SALARY IN ADVANCE JUST BECAUSE THE CALCULATION OF VRS IS BASED ON YEA RS OF SERVICE, IT DOES NOT MEAN THAT IT BECOMES SALARY IN ARREAR OR SALARY IN ADVANCE AND HENCE RELIEF U/S.89(1) CANNOT BE GIVEN. 4. AT THE TIME OF HEARING BEFORE US NONE APPEARED O N BEHALF OF ASSESSEE DESPITE NOTICE WAS SERVED UPON HIM AS IS CLEAR FROM THE ACKNOWLEDGEMENT SLIP AVAILABLE ON RECORD. 5. AFTER HEARING LD. DR AND PERUSING THE RECORD WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE FOLLOWING DECI SIONS OF HONBLE HIGH COURTS IN THE CASE OF CIT V. M. RAMAN (2000) 245 ITR 856 (MAD) AND IN THE CASE OF CIT V. NAGESH DEVIDAS KULKARNI (2007) 291 ITR 407 (BOM). IN THE CASE OF M.RAMAN (SUPRA) HONBLE COURT HAS HELD:- THE AMOUNT RECEIVED BY THE EMPLOYEE AT THE TIME OF VOLUNTARY RETIREMENT OF SERVICE WOULD BE REGARD AS SALARY AND THE RELIEF UNDER SECTION 89 OF THE INCOME-TAX ACT, 1961, WOULD BE AD MISSIBLE IN RESPECT OF SUCH SUM AND IN THE CASE OF NAGESH DEVIDAS KULKARNI (SUPRA) HONBLE COURT HAS HELD:- SECTION 89 OF THE ACT INTER ALIA PROVIDES THAT WHE RE IN ANY FINANCIAL YEAR, THE ASS RECEIVES AN AMOUNT IN THE NATURE OF S ALARY OR RECEIVES PAYMENT WHICH IS A PROFIT IN LIEU OF SALARY, THEN T HE ASSESSING OFFICER, MAY ON AN APPLICATION, GRANT SUCH RELIEFS AS MAY BE PRESCRIBED. RULES 21A, 21AA AND 21B OF THE INCOME-TAX RULES, 1962, PR OVIDE FOR THE ITA NO.2255/AHD/2009 A.Y. 2004-05 SH NANUBHAI J PATEL V. CIT, VALSAD PAGE 3 MECHANISM FOR GRANTING RELIEF UNDER SE4CTION 89 OF THE ACT. THE EXPRESSION PROFITS IN LIEU OF SALARY ARE DEFINED UNDER SECTION 17(3). EVEN IF THE ASSESSEE HAS OPTED FOR RETIREMENT VOLUN TARILY, THERE HAS TO BE TERMINATION BY THE EMPLOYER AND, THEREFORE, WHIL E TERMINATING SERVICE ANY AMOUNT PAID ON ACCOUNT OF VOLUNTARY RETIREMENT WOULD BE PROFIT IN LIEU OF SALARY COVERED UNDER SECTION 17(3) OF THE ACT. THE AMOUN T PAID ON TERMINATION OF SERVICE DUE TO VOLUNTARY RETIREME NT MAY BE AN EX GRATIA PAYMENT, BUT IT WOULD BE PROFITS IN LIEU OF SALARY AS CONTEMPLATED UNDER SECTION 17(3) OF THE ACT. WHETHER THE TERMINA TION OF EMPLOYMENT TOOK PLACE ON ACCOUNT OF THE EMPLOYEE OR NOT IS WHO LLY IRRELEVANT. THEREFORE, THE AMOUNT RECEIVED BY THE ASSESSEE BEIN G PROFITS IN LIEU OF SALARY AS CONTEMPLATED UNDER SECTION 17(3) OF THE ACT, T HE ASSESSEE WOULD BE ENTITLED TO THE RELIEF UNDER SECTION 89 OF THE ACT. THE DEFINITION OF THE WORDS PROFITS IN LIEU OF SALARY IN SECTION 17(3) OF THE ACT, IS AN INCLUSIVE DEFINITION AND AS PER SECT ION 17(3)(II), ANY PAYMENT RECEIVED BY THE ASSESSEE FROM AN EMPLOYER E XCEPT THE PAYMENTS REFERRED IN CLAUSES (10), (10A), (10B), (1 1), (12), (13) OR (13A) OF SECTION 10 WOULD BE PROFITS IN LIEU OF SALARY. SINCE THE PAYMENT RECEIVED UNDER THE VOLUNTARY RETIREMENT COVERED UND ER SECTION 10(10C) OF THE ACT DOES NOT FIND PLACE IN THE EXCLUDED CATE GORY SPECIFIED IN SECTION 18\7(3)(II), THE AMOUNT RECEIVED ON VOLUNTA RY RETIREMENT WOULD BE PROFITS IN LIEU OF SALARY AS CONTEMPLATED UNDER SECTION 17(3) OF THE ACT AND CONSEQUENTLY ENTITLED TO RELIEF UNDER SECTI ON 89. THE ASSESSEE IS ENTITLED TO THE EXEMPTION UNDER SEC TION 10(10C) OF THE ACT AND ALSO REBATE UNDER SECTION 89 OBTAIN RESPECT OF THE AMOUNT RECEIVED IN EXCESS OF RS.5,0,000 ON ACCOUNT OF VOLU NTARY RETIREMENT. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, THE ASS ESSING OFFICER IS DIRECTED TO GIVE RELIEF TO THE ASSESSEE U/S.89(1) OF THE ACT. T HIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/06/2011 SD/- SD/- (A.N.PHAUJA) (D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 30/06/2011 *DKP ITA NO.2255/AHD/2009 A.Y. 2004-05 SH NANUBHAI J PATEL V. CIT, VALSAD PAGE 4 COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-I, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD