The Asstt. Commissioner Of Income-Tax, Belgaum V. Shri. Appasaheb Baburao Kamable, Belgaum

ITA 263/PAN/2013

• Counselvise Citation: 26324114 RSA 2013
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 25-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONAL L SONKAVDE LD
• Assessee Lawyers: APPASAHEB B KAMBLE ASS
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 263 /PNJ/2013 (ASSESSMENT YEAR - 2008 - 09 ) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 1, BELGAUM (APPELLANT) VS. SHRI APPASAHEB BABURAO KAMAB LE PLOT NO.3681, JEEVAN JYOTI, BASAVESHWAR NAGAR EXTENTION , RAMTIRTH NAGAR, BELGAUM. PAN:ACQPK0674G (RESPONDENT) APPELLANT BY : SMT. SONAL L. SONKAVDE, LD. DR. RESPONDENT BY : SHRI APPASAHEB B. KAMBLE (ASS.) DATE OF HEARING : 15 /04/2014 D ATE OF PRONOUNCEMENT : 06/06 /2014 O R D E R PER: D.T. GARASIA THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGA INST THE ORD ER OF CIT(A) - BELGAUM, DATED 18 TH JULY, 2 013 FOR THE ASSESSMENT YEAR 2008 - 09 . 2. THE GROUNDS ARE RAISED IN THIS APPEAL WHICH READ AS UNDER: (1) THE ORDER PASSED BY THE CIT(A) IS AGAINST THE ORDER /INSTRUCTION OF THE BOARD IN F. NO.200/34/2009 - IT.I DATED 6.10.2009 AND AS SUCH, COVERED BY T HE EXCEPTIONS AT PARA - 8(B) OF INSTRUCTION NO.3/2011 DATED 09.02.2011 IN REGARD TO MONETARY LIMIT FOR FILING OF APPEAL AND THEREFORE, IT IS PRAYED THAT THE APPEAL ON THE ISSUE BE ADMITTED IN LAW. (2) THE CIT(A) ERRED IN IGNORING E - CIRCULAR ON EXIST OPTION SCHEME ISSUED BY THE STATE BANK OF INDIA, CORPORATE CENTRE , MUMBAI WHEREIN, AS PER PARA - 10 , IT IS CLEARLY MENTIONED THAT NO EXEMPTION OF EX - GRATIA FRO M INCOME TAX UNDER SECTION 10(10 C) OF THE I.T. ACT, 1961, IS INTENDED IN THAT SCHEME. (3) THE CIT(A) ERRED IN PRESUMING THAT REQU IREMENTS OF RULE 2BA OF I.T. RUL ES, 1962 HAVE BEEN MET IGNORING THE E - CIRCULAR OF THE SBI, AS WELL AS THE BOARDS INSTRUCTION NO.200/34/2009 - IT.I DATED 6.10.2009 WHEREIN, IT IS CLEARLY MENTIONED THAT THE SCHEME FRAMED BY THE STA TE BANK OF PATIALA AND STATE BANK OF INDIA DOES NOT LAY OUT ELIGIBILIT Y FOR DEDUCTION UNDER SECTION 10(10 C). 2 . ITA NO. 263/PNJ/2013 (A.Y.2008 - 09) ACIT VS. SHRI APPASAHEB BABURAO KAMABLE 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE A.Y.2008 - 09 DECLARING A TOTAL INCOME OF RS. 6,94,39/ - . T H E ASSESSMENT WAS COMPLETED U/S. 1 43(1). SUBSEQUENTLY, IT WAS OBSERVED BY THE ASSE SSING OFFICER THAT THE ASSESSEE HAS RECEIVED AN EX - GRATIA AMOUNT AND CLAIMED THE EXEMPTION OF RS.5,00,000/ - U/S. 10(10C). THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSE E IS NOT ENTITLED FOR EXEMPTION, THEREFORE, HE ADDED THIS AMOUNT TO THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS RECEIVED EX - GRATIA AMOUNT FROM STATE BANK OF INDIA CONSEQUENT UPON VOLUNTARY RETIREMENT SCHEME. THE ASSESSING OFFICER WAS NOT SATISFIED THIS EXPL ANATION, THEREFORE, HE ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE CAREFULLY AND THE APPELLANTS SUBMISSIONS. THE EX - GRATIA AMOUNT RECEIVED ON VOLUNTARY RETIREMENT IS EXEMPT U/S. 10(10C) OF THE ACT TO THE EXTENT OF RS.5,00,000/ - . THE SCHEME OF THE SECTION, THEREFORE, BECOMES APPAREN T CONSIDERING THE OBJECT TO WHICH THE AMENDMENT WAS INTRODUCED BY THE PARLIAMENT. THE OBJECT BEING TO MAKE THE PUBLIC SECTOR UNDERTAKING TO PLAN THEIR ROLE IN NATIONAL ECONOMY BY IMPROVEMENT IN THEIR FUNCTIONING IN ALL POSSIBLE WAYS. THE APPELLANT WAS AN E MPLOYEE OF AN AUTHORITY ESTABLISHED UNDER THE CENTRAL ACT. THE SCHEME FOR VOLUNTARY (EXIT OPTION SCHEME) WAS FRAMED BY STATE BANK OF INDIA CONSIDERING THE PROVISIONS OF THE ACT ITSELF. SUCH A BENEFIT IS AVAILABLE TO THE EXTENT OF RS.5 LAKHS. THE ISSUE OF A LLOWING EXEMPTION UNDER SECTION 10(10C) OF THE ACT WAS EXAMINED BY THE HONBLE HIGH COURT OF BOMBAY, KOLKATTA AND JURISDICTIONAL HIGH COURT AND HELD THAT THE SAID EXEMPTION IS ALLOWABLE OUT OF THE COMPENSATION RECEIVED BY THE RETIRED EMPLOYEES, SOME OF THE DECISIONS ARE GIVEN BELOW - I) IN THE CASE OF CIT VS. NAGESH DEVIDAS KULKARNI AND OTHERS (2007) 291 ITR 407 (BOMBAY) IT IS HELD THAT SECTION 10(10C) OF THE IT ACT, INTER ALIA, PROVIDES THAT ANY AMOUNT RECEIVED BY AN EMPLOYEE ON HIS VOLUNTARY RETIREMENT O R TERMINATION OF SERVICE FROM ANY EMPLOYER NAMED THEREIN, IN ACCORDANCE WITH ANY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT SHALL NOT BE INCLUDED IN COMPUTING THE TOTAL INCOME TO THE EXTENT NOT EXCEEDING FIVE LAKHS OF RUPEES. SECTION 10(10C) APPLIES TO THE AMOUNT RECEIVED ON VOLUNTARY RETIREMENT UPTO RS. 5,00,000 AND IT DOES NOT PLACE ANY EMBARGO ON THE AMOUNT RECEIVED ON VOLUNTARY RETIREMENT IN EXCESS OF RS. 5,00,000. ON A PLAIN READING OF THE SECOND PROVISO TO S.10(10C) OF THE ACT, IT IS CLEAR THAT THE RES TRICTION 3 . ITA NO. 263/PNJ/2013 (A.Y.2008 - 09) ACIT VS. SHRI APPASAHEB BABURAO KAMABLE THEREIN IS ONLY WITH REFERENCE TO THE GRANT OF EXEMPTION UNDER SECTION 10(10C) AND THE SAID PROVISO DOES NOT BAR RELIEF IF AVAILABLE UNDER S.89. 5. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE HAS RECEIVED ON VOLUNTARY RETIREMENT AMOUNT OF RS.5,00,000/ - . THE ASSESSEE RETIRED FROM SERVICE UPON VOLUNTARY RETIREMENT SCHEME FRAMED BY THE GOVT. OF INDIA. THE GOVT. OF INDIA HAS MADE SCHEME FOR VOLUNTARY (EXIT OPTION SCHEME) WAS FRAMED BY STATE BANK OF INDIA CONSIDERING THE PROVISIONS OF THE ACT . AS PER SUCH SCHEME BENEFIT IS AVAILABLE TO THE EXTENT OF R S. 5,00,000/ - .WE FIND THAT AO DISALLOWED THE CLAIM OF THE ASSESSEE RELIED UPON THE CBDT CIRCULAR VIDE F. NO. 200/34/2009 - IT.I AND HE WAS OF THE VIE W THAT ASSESSEE IS NOT ENTITLED TO THE RELIEF UNDER SECTION 89 IN ADDITION TO THE BENEFITS AVAILABLE UNDER SECTION 10(10C). WE FIND VARIOUS SUCH ISSUE S WHEN SOMEBODY IS RETIRED FROM THE STATE BANK OF INDIA UNDER EXIT OPTION SCHEME AND IF HE RECEIVES EX - GRATIA PAYMENT OUT OF WHICH 5,00,000/ - TO BE EXEMPT U/S. 10(10C) READ WITH RULE 2BA OF I.T. RULES 1962. THE ISSUE OF ALLOWING EXEMPTION U/S. 10(10C) OF THE IT ACT WAS EXAMI NED BY THE HONBLE HIGH COURT O F BOMBAY, KOLKATA AND JURISDICTIONAL H IGH COURT, IN THE CASE OF CIT VS. NAGESH DEVIDAS KULKARNI AND ORS. (2007) 291 ITR 407(BOMBAY) HELD THAT ANY AMOUNT RECEIVED BY EMPLOYEE ON HIS VOLUNTARY RETIREMENT IN ACCORDANCE WITH ANY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT SHALL NOT BE INCLUDED IN CO MPUTING THE TOTAL INCOME TO THE EXT ENT NOT EXCEEDING OF RS. 5,00,000/ - . WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KOODATHIL KALLYATAN AMBUJAKSHAN (2009) 309 IT R (BOM) - WHEREIN IT IS HELD AS UNDER: THAT THE OBJECT IN ENACTING SECTION 10(10 C) OF THE INCOME TAX ACT 1961 WAS TO REDUCE EMPLOYEE STRENGTH SO THAT UNWANTED PERSONNEL COULD SEEK VOLUNTARY RETIREMENT THEREBY ENABLING THE PUBLIC SECTOR TO ACHIEVE THE TIME OBJECT OR WHICH IT WAS ESTABLISHED. RULE 2BA OF THE INCOME T AX RULE S 1962 LAYS DOWN THE GUIDELI NES FOR PURPOSE OF SECTION 10(10 C). IT WAS HELD THAT THE SCHEME SATISFIED ALL THE CONDITIONS LAID DOWN IN RULE 2BA. IT SATISFIED THE FIRST TEST, NAMELY, 10 YEARS OF SERVICE OR 40 YEARS OF AGE. THE ASSESSEE HAD PUT IN 25 YEARS OF SERVICE AND 50 YEARS OF AGE. 4 . ITA NO. 263/PNJ/2013 (A.Y.2008 - 09) ACIT VS. SHRI APPASAHEB BABURAO KAMABLE SECONDLY, IT APPLIED TO ALL THE EMPLOYEES. 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 R EDUCTION IN THE EXISTING STRENGTH OF THE EMPLOYEES. THE THIRD REQUIREMENT WAS ALSO, THEREFORE, SATISFIED. THE FOURTH REQUIREMENT WAS THAT VACANCIES CAUSED BY THE VOLUNTARY RETIREMENT OR VOLUNTARY SEPARATION WERE NOT TO BE FILLED UP. ADDITIONAL EVIDENCE TAK EN ON RECORD U/S. 260A(7) SHOWED THAT NONE OF THESE POSTS FROM THE DAY THE SCHEME CAME INTO FORCE TILL 2008 HAD BEEN FILLED IN. IN OTHER WORDS, THE FOURTH REQUIREMENT HAD ALSO BEEN SATISFIED. CONSIDERING THAT THE RBI IS A STATUTORY BODY CREATED UNDER AN AC T THERE IS NO OTHER COMPANY OR CONCERN BELONGING TO THE SAME MANAGEMENT. THE FIFTH REQUIREMENT HAD ALSO BEEN SATISFIED. THE SIXTH REQUIREMENT HAD ALSO BEEN SATISFIED AS IN THE INSTANT CASE WHAT WAS OFFERED WAS TWO MONTH SALARY FOR EACH COMPLETED YEAR OF S ERVICE. THUS, THE SCHEME EXPRESSLY OR IMPLIEDLY SATISFIED ALL THE REQUIREMENTS OF THE SECTION AS WELL AS THE GUIDELINES FRAMED F OR THE PURPOSE OF SECTION 10(10C ), NAMELY, RULE 2BA. THE AMOUNT RECEIVED BY THE ASSESSEE UNDER THE OPTIONAL EARLY RETIREMENT SCH EME OF RESERVE BANK OF INDIA WAS ELIGIBLE F OR EXEMPTION UNDER SECTION 10(10 C). FOR THE AMOUNTS IN EXCESS OF RS.5 LAKHS RECEIVED UNDER THE OPTIONAL EARLY RETIREMENT SCHEME, THE ASSESSEE WOULD BE ENTITLED TO THE BENEFITS UNDER SECTION 89 IN ADDITION TO THE B ENEFITS AVAILABLE UNDER SECTION 10(10C). III. SUBSEQUENT TO THE DECISION OF THE HONBLE HIGH COURT SUPRA, THE BOARD HAS ISSUED CIRCULAR F.NO.173(1)/32/2009 - ITA - 1 DATED 08.05.2009, THE CONTENT OF THE SAID CIRCULAR IS REPRODUCED AS UNDER - CENTRAL BOARD OF DIRECT TAXES VIDE ITS LETTER F. N0.225/74/2005 - ITA - II DATED 20.10.2005 RELYING ON A LETTER FROM RESERVE BANK OF INDIA (RBI), HAD ADVISED ALL FILED FORMATION THAT THE OPTIONAL EARLY RETIREMENT SCHEME (QERS) OF RBI DOES NOT CONFORM WITH THE PRO V ISIONS OF RULE 2BA OF INCOME TAX RULES, 1962. ACCORDINGLY, THE AMOUNT RECEIVED BY THE EMPLOYEES OF RB! OPTING FOR OERS DID NOT QUALIFY FOR EXEMPTION UNDER SECTION 10(1OC) OF THE INCOME TAX ACT, 1961. IT HAS BEEN BROUGHT TO THE NOTICE OF THE BOARD THAT THE HONBLE HIGH COURT OF BOMBAY VIDE ITS ORDER DA TED 4 TH JULY 2008 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KOODATHIL KALLYATAN A RNBUJAKSHAN (2008) 219 CTR (BOM ) 80 HAS HELD THAT OPTIONAL EARLY RETIREMENT SCHEME OF RBI SATISFIES ALL THE CONDITIONS OF RULE 2BA A ND AMOUNTS RECEIVED BY RETIRING EMPLOYEES THEREUND ER WERE FOR EXEMPTION U/S. 10(10 C). THAT JUDGMENT HAS BECOME FINAL. THE MATTER HAS THEREFORE BEEN REVIEWED IN THE BOARD IN VIEW OF THE AFORESAID ORDER OF HONBLE HIGH COURT OF BOMBAY AND IT HAS BEEN DECIDE D THAT THE EMPLOYEES OF RBI WHO ACCEPTED OERS WOULD BE ENTITLED FOR THE BENEFIT OF SECTION 10(1OC) OF THE INCOME TAX ACT, 1961. IN VIEW OF THIS, I AM DIRECTED TO REQUEST YOU TO BRING THIS TO THE NOTICE OF ALL OFFICERS WORKING UNDER YOUR CHARGE FOR TAKING N ECESSARY ACTION. 5 . ITA NO. 263/PNJ/2013 (A.Y.2008 - 09) ACIT VS. SHRI APPASAHEB BABURAO KAMABLE WE FIND THAT THE HONBLE KARNATKA HIGH COURT HAS ALSO TAKEN THE SIMILAR VIEW IN 279 ITR 402 (KAR). WE AR E OF THE VIEW THAT CIT(A) IS JUSTIFIED IN HIS ACTION AND OUR INTERFERENCE IS NOT REQUIRED. 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OP EN COURT ON 6.6 .2014. SD/ - SD/ - ( P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 6.6 .2014 P.S. - *PK* COPY TO : ( 1 ) APPELLANT ( 2 ) RESPONDENT ( 3 ) CIT CONCERNED ( 4 ) CIT(A) CONCERNED ( 5 ) D.R ( 6 ) GUARD FILE TRUE COPY, BY ORDER