ITO, New Delhi V. Sh. Ramesh Chander, Gurgaon

ITA 3615/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 5590 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 25-01-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 21-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: RAMESH SINGH YADAV
• Keywords: Tax effect; Benefit of exemption
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 3615/DEL/2009 ASSESSMENT YEAR : 2002-03 INCOME TAX OFFICER, WARD 47(1), NEW DELHI. VS. SHRI RAMESH CHANDER, VILL & PO MAULAHERA, GURGAON, HARYANA. PAN : ADNPC2780P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAMESH SINGH YADAV, AR REVENUE BY : SHRI H.K. LAL, SR. DR. ORDER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF THE CIT (A) DATED 15 TH JUNE, 2009 FOR ASSESSMENT YEAR 2002-03. GROUNDS O F APPEAL READ AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT (A) HAS ERRED IN I) DIRECTING THE AO TO ALLOW EXEMPTION U/S 10(10C) OF THE IT ACT AMOUNTING TO RS.4,26,416/- IGNORING THE FACT TH AT INVESTIGATION WING OF THE INCOME TAX DEPARTMENT HAD CONDUCTED INQUIRY IN THE CASE OF MARUTI UDYOG LTD. AND CONCLUDED THAT THE VRS/VSS FOR ITS EMPLOYEES WAS NO T IN CONFORMITY WITH SECTION 10 (10C) OF THE IT ACT READ WITH RULE 2BA OF THE IT RULES. II) IGNORING THE FACT THAT THE ASSESSEE VIDE HIS LETTER DATED 22.3.2005 HAS HIMSELF WITHDRAWN HIS CLAIM U/S 10(10 C) AND HAS ALSO SURRENDERED HIS REFUND CLAIM. III) IGNORING THE FACT THAT MARUTI UDYOG LTD. VIDE THEIR LETTER ITA NO.3615/DEL/2009 2 DATED 13.02.2003 ADDRESSED TO THE ITO, WARD-47(1), NEW DELHI IN RESPONSE TO NOTICE U/S 133 (6) IN THE CASE OF SHRI BRAHAM PRAKASH HAD ACCEPTED THAT THE SCHEME WAS NOT COVERED UNDER ANY PROVISION OF THE INCOME TAX ACT. IV) QUOTING THE DECISION OF CIT VS. G.V. VENUGOPAL (2005) 273 ITR 307 (MAD), CIT ANOTHER VS. P. SURENDER PRAB HA (2005) 279 ITR 407 KAR & CIT VS J. RAMAMANI (2006) 286 ITR 616 (MAD) WHICH ARE HAVING TOTALLY DIFFERENT FA CTS. IN THESE CASES THE ASSESSEE HAS CLAIMED RELIEF U/S 89( 1) AS WELL AS EXEMPTION U/S 10(10C) IN RESPECT OF COMPENSATION RECEIVED UNDER VRS. 2. THE ASSESSEE IS AN EX EMPLOYEE OF MATURI UDYOG L TD.. HE WAS RELIEVED FROM HIS SERVICES UNDER VOLUNTARY SEPARATION SCHEME (VSS). THE SALARY OF THE ASSESSEE WAS RS.64,319/-. THE BENEFIT UNDER VSS WA S RS.4,26,416/- AND OTHER INCOME REPORTED BY THE EMPLOYER WAS RS.31,419/-. T HE RETURN OF INCOME WAS FILED AT RS.64,319/-. LATER ON, THE ADDITION WAS M ADE BY THE AO OF THE AFOREMENTIONED SUM OF RS.4,26,415/- BY NOT GRANTING THE BENEFIT TO THE ASSESSEE CLAIMED U/S 10(10C) OF THE ACT. LD. CIT (A) HAS AC CEPTED SUCH CLAIM OF THE ASSESSEE. THE DEPARTMENT IS AGGRIEVED, HENCE, IN A PPEAL. 3. AT THE OUTSET, IT WAS SUBMITTED BY LD. AR THAT T HE DEPARTMENTAL APPEAL IS NON-MAINTAINABLE, ON THE GROUNDS OF LOW TAX EFFECT. HE SUBMITTED THAT THE TAX EFFECT IN THE PRESENT CASE EXCLUDING INTEREST IS LE SS THAN RS.2 LAC. SECONDLY, HE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF COORDINATE BENCH DATED 30 TH OCTOBER, 2009 PASSED IN THE CASE OF ITO VS. SHRI BABU LAL IN ITA NO.3391/DEL/2009. HE HAS PLACED BE FORE US A COPY OF THE SAME. IN THAT CASE ALSO THE ASSESSEE WAS AN EMPLOYEE OF M ARUTI UDYOG LTD. AND BENEFIT OF EXEMPTION U/S 10(10C) OF RS.4,67,110/- W AS CLAIMED, WHICH CLAIM WAS ALLOWED BY THE CIT (A) AND AFTER CONSIDERING THE SU BMISSIONS OF BOTH THE PARTIES, IT WAS OBSERVED THAT THE BENEFIT OF VSS WAS BELOW R S.5 LAC AND THE AMOUNT RECEIVED UPTO RS.5 LAC WAS EXEMPT FROM INCOME TAX A S THE NECESSARY CONDITIONS WERE FULFILLED. THUS, IT WAS SUBMITTED THAT DEPARTM ENTAL APPEAL DESERVES TO BE DISMISSED ON BOTH THE GROUNDS. ITA NO.3615/DEL/2009 3 4. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF AO AND PLEADED THAT ADDITION WAS RIGHTLY MADE BY THE AO. 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES, WE FOUND THAT THE APPEAL FILED BY THE DEPARTMENT IS NOT MAINTAINABLE ON BOTH THE GROUNDS. FIRSTLY ON THE BASIS OF LOW TAX EFFECT AND AGAIN ON MERITS AS THE FACTS OF THE CASE ARE SIMILAR TO THE FACTS OF AFOREMENTIONED DECISION REL IED UPON BY LD. AR RENDERED BY COORDINATE BENCH. FOR THE SAKE OF COMPLETENESS WE REPRODUCE THE SAID ORDER IN ITS ENTIRETY:- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 12.5.2009 FOR ASSESSMENT YEAR 2002-03, WHEREI N REVENUE HAS DISPUTED DIRECTION OF CIT(A) GIVEN TO THE ASSES SING OFFICER TO ALLOW EXEMPTION U/S 10(10C) OF THE INCOME TAX ACT I N RESPECT OF VRS RECEIPTS. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS AN EMPLOYEE OF MARUTI UDYOG LIMITED WHO TOOK RETIREMEN T UNDER THE VSS/VRS. THE ASSESSEE FILED HIS RETURN OF INCOME O N 1.3.2004 DECLARING AN INCOME OF RS.56,641/ CLAIMING EXEMPTIO N OF RS.4,67,110/- U/S 10(10C) OF THE INCOME TAX ACT. T HE ASSESSING OFFICER SELECTED THE CASE FOR SCRUTINY ASSESSMENT B Y ISSUING STATUTORY NOTICES AND ASKED THE ASSESSEE TO SHOW CA USE WHY THE CLAIM OF EXEMPTION U/S 10(10C) OF THE I.T. ACT SHOU LD NOT BE DISALLOWED. THE ASSESSEE FILED WRITTEN SUBMISSIONS , AND AFTER CONSIDERING THE SUBMISSION FILED BY THE ASSESSEE, T HE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION U/S 10(10 C) OF THE INCOME TAX ACT ON THE GROUND THAT THE CLAIM IS NOT AS PER LAW AS THE SAME IS NOT COVERED BY THE PROVISIONS OF SECTIO N 19(10C) READ WITH RULE 2BA. HE PROCEEDED TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE AT RS.5,15,450/-. 2. BY THE IMPUGNED ORDER, CIT(A) ALLOWED ASSESSEES CLAIM BY RELYING ON THE FOLLOWING DECISIONS:- I) CIT VS. G.V. VENUGOPAL-273ITR307 (MAD); II) CIT & ANOTHER VS. P. SURENDRA PRABHA 279 ITR 402 (KAR); III) CIT VS. J. RAMAMANI 286 ITR 616 (MAD). ITA NO.3615/DEL/2009 4 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. IN VI EW OF THE DISCUSSION IN THE CASE LAWS RELIED ON BY THE CIT(A) , THE COMPENSATION RECEIVED UNDER VRS AND VSS WAS BELOW R S.5 LAKHS AND AS PER SECTION 10(10C), THE AMOUNT RECEIVED UPT O RS.5 LAKHS IS EXEMPT FROM INCOME TAX. THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT ALL THE CONDITIONS OF SECTION 10(10C) READ WITH RULE 2BA ARE FULFILLED. ACCORDINGLY, ASSESSEE WAS ENTI TLED FOR CLAIM OF EXEMPTION OF RS.5 LAKHS ON THE AMOUNT RECEIVED AT T HE TIME OF VOLUNTARY RETIREMENT. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 6. IN THE CIRCUMSTANCES, AFTER HEARING BOTH THE PAR TIES, WE DISMISS THE DEPARTEMTNAL APPEAL. 7. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. . 8. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.01. 2010. [B.P. JAIN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 29.01.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES