Ravi Garg, V. ITO Ward 47 (2),

ITA 321/DEL/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3950 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 13-05-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 19-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL I.T.A.NO. 321(DEL)/2007 ASSESSMENT YEAR: 2002-03 SHRI RAVI GARG, INCOME-TAX OFFICER, B-651, DDA FLATS, W ARD 47(2), NEW DELHI. EAST OF LONI ROAD, VS. NEW DELHI-110093. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL SHARMA, ADVOCA TE RESPONDENT BY : SHRI H.K. LAL, SR. DR ORDER PER K.G. BANSAL : AM THIS APPEAL WAS DISMISSED IN LIMINE FOR NOT PAYING FULL APPEAL FEE AND NOT CURING THE DEFECT EVEN AFTER SE RVICE OF THE DEFECT MEMO. HOWEVER, THE ORDER WAS RECALLED ON 21.10.2009 IN M.A. NO. 232(DEL)/2009 AFTER CURING THE DEFECT. 2. THE FACTS OF THE CASE ARE THAT THE ASSE SSEE HAD BEEN WORKING WITH THE DABHOL POWER PLANT. THE COMPANY OFFERE D HIM SEVERANCE PACKAGE ON 17.8.2001, WHICH WAS EFFECTED. HE WAS PAID TOTAL SALARY OF RS. 11,06,721/- AND THE LETTER OF SEVERANCE MENT IONS THAT THE AMOUNTS ITA NO. 321(DEL)/07 2 PAID IN CONNECTION WITH SEVERANCE ARE TAXABLE. THESE AMOUNTS ARE AS UNDER:- (I) THREE MONTH NOTICE PAY 1,49,401/- (II) EXTRA SEVERANCE PAY 3,29,959/- (III) FURNITURE PAYMENT 1,00,000/- (IV) GRATUITY 80,000/- TOTAL: 6,59,360/- 2.1 THE ASSESSEE CLAIMED FOLLOWING AMOUNTS T O BE NOT INCLUDIBLE IN HIS TOTAL INCOME:- (I) LEAVE SALARY U/S 10(10AA)(I) 1,61,850/- (II) GRATUITY EXEMPT 80,543/- (III) EXEMPT U/S 10(10C) 5,00,000/- TOTAL: 7,42,393 2.2 IN THE ASSESSMENT ORDER, IT IS MENTIONED THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE AFORESAID AMOUNTS WERE NOT INCLUDIBLE IN THE TOTAL INCOME. IT IS FURTHER MENTIONED THAT THE CAS E OF THE ASSESSEE IS NOT COVERED UNDER RULE 2BA OF THE INCOME-TAX RULES, FRAMED U/S 10(10C). THE CLAIM IS ALSO NOT COVERED U/S 10(10B). TH EREFORE, THE AFORESAID CLAIM WAS DENIED. 3. THE FINDINGS OF THE LD. CIT(A) IN THE EX-PART E ORDER ARE THAT :- (I) THE AO MAY LOOK INTO THE CLAIM OF LEAVE SALARY AND ALLOW THE SAME PROVIDED THE ENTITLEMENT OF LEAVE DOES NOT EXCEED 30 DAYS FOR EVERY YEAR OF SERVICE ACTUALLY RENDERED; ITA NO. 321(DEL)/07 3 (II) THE NON-INCLUSION OF GRATUITY MAY BE CONSID ERED AGAIN AS THE DISALLOWANCE HAS BEEN MADE WITHOUT ASSIGNING AN Y REASON; AND (III) DEDUCTION U/S 10(10C) OR SECTION 10(10B) IS NOT ADMISSIBLE BECAUSE THE ASSESSEE IS NOT A WORKMAN AND CONDITIONS LAID DOWN IN RULE 2BA ARE NOT SATISFIED. 4. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT ALTHOUGH FIVE SUBSTANTIVE GROUNDS HAVE BEEN TAKEN, THE REAL GROUND TO BE DECIDED IS NUMBERED 4(I) THAT ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE ACTIO N OF THE AO IN DISALLOWING THE DEDUCTION OF RS. 5.00 LAKH IGNORING THE EXPLANATION AND EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE. HE DREW OUR ATTENTION TO THE PAPER BOOK, WHICH CONSISTS OF COMPUTATION OF INCO ME AND COPY OF SEVERANCE LETTER RECEIVED FROM THE EMPLOYER -COMPANY. THE SEVERANCE AGREEMENT DATED 17.8.2001 MENTIONS THAT DUE TO BUSINESS CIRCUMSTANCES AND SUBSEQUENT RE-STRUCTURING, THE COMPANY OFF ERS SEVERANCE PLAN WITH EFFECT FROM 17.8.2001. THE EMPLOYEE IS BOUN D TO FOLLOW REGULATION ITA NO. 321(DEL)/07 4 OF THE COMPANY MENTIONED IN SUB-CLAUSES (A),(B) A ND (C) OF CLAUSE 8. THE DETAILS OF PAYMENT OF SEVERANCE OF RELATIONSHIP ARE GIVEN AS UNDER:- COMPONENTS AMOUNT IN RUPEES 3 MONTHS NOTICE PAY 1,49,401/- EXTRA SEVERANCE PAY 3,28,959/- FURNITURE PAYMENT 1,00,000/- GRATUITY 80,543/- TOTAL: 6,58,903/- 4.1 THE CASE OF THE LD. COUNSEL IS THAT ALL TH E MONEY RECEIVED IS NOT INCLUDIBLE IN THE TOTAL INCOME. ON THE OTHER HAN D, THE LD. DR RELIES ON THE ORDER OF THE AO. 5. WE HAVE CONSIDERED THE FACTS OF THE CA SE AND SUBMISSIONS MADE BEFORE US. IN SO FAR AS THE PAYMENT OF GRA TUITY IS CONCERNED, THE LD. CIT(APPEALS) HAS RESTORED THE MATTER TO THE FILE OF THE AO. IN ORDER TO ENABLE THE AO TO EXAMINE THE MATTER DE-NOVO , WE RESTORE THIS MATTER TO HIS FILE FOR FRESH ADJUDICATION. 5.1 FURTHER, WE FIND THAT THE AMOUNTS MENTIONE D IN THE ANNEXURES TO SEVERANCE PLAN DIFFER FROM THE AMOUNTS MENTION ED IN THE ASSESSMENT AND THE APPELLATE ORDERS, EXCEPT FOR THE GRA TUITY AMOUNT. THE IMPORT OF ITA NO. 321(DEL)/07 5 VARIOUS PAYMENTS MADE AS PER SEVERANCE PLAN H AS NOT BEEN EXPLAINED TO US FULLY BY THE LD. COUNSEL. THEREFORE, WE THINK IT FIT TO RESTORE THE WHOLE MATTER TO THE FILE OF THE AO FOR FRESH A DJUDICATION BY WAY OF A SPEAKING ORDER, RECONCILING THE AMOUNTS WITH THE AMOUNTS MENTIONED IN SEVERANCE PLAN. 6. IN THE RESULT, THE APPEAL IS TREATED AS ALLO WED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13.05.2010. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 13.5.2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- SHRI RAVI GARG, NEW DELHI. ITO, WARD 47(2), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.