Asst. CIT, Ratnagiri Circle, Ratnagiri V. Shri Shriram Gangadhar Dholye, Ratnagiri

ITA 386/PUN/2013

• Counselvise Citation: 38624514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: SHR IRAM GANGADHAR DHOLYE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.386/PN/2013 A.Y. 2008-09 DCIT, TATNAGIRI CIRCLE, RATNAGIRI APPELLANT VS. SHRI SHRIRAM GANGADHAR DHOLYE SAHYADRI NAGAR, SADAVALI AT. POST DEVRUKH, TAL. SANGMESHWAR, DIST. RATNAGIRI PAN: AATPD 3873D RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI SHR IRAM GANGADHAR DHOLYE DATE OF HEARING: 25.03.2014 DATE OF ORDER : 26.03.2014 ORDER PER SHAILENDRA KUMAR YADAV: THIS APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), [(IN SHORT CI T(A)], KOLHAPUR FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS. 1. THE APPELLANT PRAYS THAT MONETARY LIMITS SPECIFIED UNDER INSTRUCTIONS NO.3 OF 2011 DATED 09.02-2011 MAY NOT BE APPLIED TO THE PRESENT CASE, AND SIMILAR OTHER CASE S, AS THESE CASES ARE COVERED BY THE DECISION OF THE H ON.BLE SUPREME COURT IN THE CASE OF CIT VS. SURYA HARBAL L TD. [243 CTR 327 (SC) ] WHEREIN, THE HON'BLE COURT HAS HELD THAT ' THE CIRCULAR DATED 09-02-2011 SHOULD NOT BE APPLIED IPSO FACTO, PARTICULARLY WHEN THE MATTER HAS A CASC ADING EFFECT. THERE ARE CASES UNDER THE INCOME TAX ACT, 1961, IN 2 WHICH A COMMON PRINCIPLE MAY BE INVOLVED IN SUBSEQU ENT GROUP OF MATTERS OR A LARGE NUMBER OF MATTERS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) FAILED TO APPRECIATE THE FACT THAT T HE EMPLOYEES OPTED FOR EXIT OPTION SCHEME DECLARED BY SBI AND SBI, PATIALA AND OTHER ASSOCIATE BANKS ARE NOT ELIGIBLE FOR EXEMPTION U/S.10(10C) AS RIGHTLY POINT ED OUT BY THE BOARD UNDER LETTER F.N0.200/34/2009/ITA.I DA TED 06-10-2009. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) IS NOT JUSTIFIED IN NOT APPRECIATING THAT THE LEGAL REQUIREMENTS PRESCRIBED UNDER RULE 2BA OF THE IT RULES, 1962 WERE NOT COMPLETELY FULFILLED UNDER THE EXIT OPTION SCHEME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HON. CIT(A) IS NOT JUSTIFIED IN IGNORING THE FACT T HAT, THERE IS ONLY A PARTIAL SATISFACTIONS OF THE CONDITIONS STIP ULATED UNDER RULE 2BA, UNDER THE AFORESAID EXIT OPTION SCH EME, AS IS BROUGHT OUT IN FOLLOWING CHART, AND IS THEREFORE , NOT ELIGIBLE FOR DEDUCTION U/S 10(10C) OF THE ACT: TEST (CONDITIONS PRESCRIBED UNDER RULE 2BA) FACTS PREVAILING IN THE INSTANT CASE. (I) SHOULD BE APPLICABLE TO EMPLOYEES WHO HAS COMPLETED 10 YEARS OF SERVICE OR COMPLETED 40 YRS OF AGE THIS CONDITION IS SATISFIED (II) SHOULD APPLY TO ALL EMPLOYEES (EXCEPT DIRECTORS) IN THIS RESPECT IT IS SEEN THAT THE SCHEME IS APPLICABLE ONLY TO CLERICAL & SUBORDINATE CADRE EMPLOYEES, AND IS NOT APPLICABLE TO THE OFFICER CADRE OF THE BANK. (III) SHOULD RESULT IN OVERALL REDUCTION IN STRENGTH OF BANK THE OBJECT OF THE SCHEME IS ONLY TO PROVIDE AN EXIT ROUT TO THE EMPLOYEES IN WORKMEN CATEGORY WHO FEEL FRUSTRATED AND DE-MOTIVATED, IT MAY BE MENTIONED THAT THERE IS NOTHING EXPRESSLY STATED IN THE SCHEME REGARDING OVERALL REDUCTION OF STRENGTH OF THE BANK, THOUGH THE STEPS TAKEN HAS RENDERED EMPLOYEES SURPLUS 3 (IV) THE VACANCY SO CAUSED SHOULD NOT BE SUBSEQUENTLY FILLED UP. THOUGH THE SBI'S LETTER DATED 31-08-2007 STATES THAT NO PERMANENT RECRUITMENT HAS BEEN MADE AGAINST SUCH RETIREMENTS, THERE IS NOTHING IN THE SCHEME WHICH INDICATES THAT THE VACANCIES SO RAISED, WILL NOT BE FILLED UP IN FUTURE. (V) THE RETIRING EMPLOYEES SHOULD NOT BE RE- EMPLOYED IN SAME COMPANY, OR COMPANY UNDER SAME MANAGEMENT. THIS CONDITION IS SATISFIED (VI) THE AMOUNT RECEIVABLE DOES NOT EXCEED 3 MONTH'S SALARY FOR EACH COMPLETED YEAR OF SERVICE, OR SALARY AT THE TIME OF RETIREMENT MULTIPLIED BY BALANCE MONTHS. THE WORKING OF THE EX-GRATIA PAYMENT IS ON ENTIRELY DIFFERENT FOOTINGS, AND SUCH CONDITIONS HAVE NOT BEEN INCORPORATED THEREIN. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HON. CIT(A) IS NOT JUSTIFIED IN IGNORING THE CONTEN TS OF LETTER OF THE BANKING AUTHORITIES (I.E ASST. GENERAL MANAG ER, LOCAL HEAD OFFICE, STATE BANK OF INDIA, BANDRA (E), MUMBAI BRANCH ), VIDE PARA 3 OF LETTER DT. 30-07-20 07, WHEREIN IT IS CATEGORICALLY ASSERTED THAT; '3. THE SCHEME DOES NOT COMPLY WITH THESE STIPULATIONS. THEREFORE TDS IS REQUIRED TO BE DEDUC TED AT SOURCE ON THE EX-GRATIA AMOUNT PAYABLE TO THE EX IT- OPTEES' 6. THE APPELLANT PRAYS THAT THIS CASE BE CLUBBED WI TH OTHER SIMILAR CASES, WHEREIN SAME ISSUE IS INVOLVED , AS THERE ARE CASES UNDER THE INCOME TAX ACT, 1961, IN WHICH A COMMON PRINCIPLE IS INVOLVED IN A LARGE NUMBER OF M ATTERS. 7. THE APPELLANT ALSO PRAYS THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTOR ED. 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, RAISE, ANY OF THE ABOVE, OR ANY OTHER GROUNDS RAISED. 3. THE ASSESSEE, AN EMPLOYEE OF STATE BANK OF INDIA , RETIRED VOLUNTARILY AS PER EXIT OPTION SCHEME ANNOUNCED BY THE BANK. 4 IN HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDER ATION, THE ASSESSEE CLAIMED EXEMPTION U/S. 10(10C) ON THE EX-G RATIA AMOUNT RECEIVED FROM BANK ON HIS VOLUNTARY RETIREME NT. THE ASSESSING OFFICER DENIED CLAIM OF EXEMPTION U/S. 10 (10C). IN APPEAL, THE CIT(A) GRANTED RELIEF BY OBSERVING AS U NDER: 4. AN IDENTICAL ISSUE HAD COMP UP BEFORE ME IN THE CASE OF SHRI VIJAY GANPATRAO PATIL IN APPEAL NO.KOP/255/09- 10 DATED 16.06.2011 FOR ASSESSMENT YEAR 2007-08 WHEREI N I HAD DECIDED THE APPEAL IN ASSESSEES FAVOUR. 5. THE DECISION GIVEN IN THE ABOVE CASE HAS BEEN UP HELD BY THE HONOURABLE JURISDICTIONAL ITAT IN ITA NO.1045/PN/2011 DATED 29.08.2012. SUBSEQUENTLY, MY DECISION WAS ALSO UPHELD BY THE ITAT IN THE FOLLOWI NG CASES: I. SHRI JAYANT B RUKADIKAR ITA NO.1046/PN/2011 30/08/2012 II. DATTATRAYA D MARATHE ITA NO.1095/PN/2011 05/09/2012 III. SMT.JAYSHREE A WALWADKAR ITA NO.1047/PN/2011 29/08/2012 IV. RAJENDRA SAHADEV DHURAT ITA NO.1357/PN/2011 15/10/2012 THEREFORE, I HOLD THAT IN THE INSTANT CASE, THE ASS ESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF EXEMPTION UNDER SECTION 10(10C) OF THE ACT. THE APPEAL ON TH IS GROUND IS THEREFORE, ALLOWED. THE SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE, IN TER ALIA SUBMITTED THAT THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CI T(A) ON THE ISSUE. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THIS ISSUE IS COVERED BY THE D ECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF NAGESH DEV IDAS KULKARNI VS. CIT (2007) 291 ITR 407 (MUM), WHEREIN, THE JURISDICTIONAL HIGH COURT HAS HELD THAT THE EX-GRAT IA PAYMENT 5 RECEIVED BY THE ASSESSEE ON VOLUNTARY RETIREMENT IS A COMPENSATION RECEIVED ON TERMINATION OF EMPLOYMENT AND HENCE THE ASSESSEE IS ENTITLED FOR THE EXEMPTION U/S.10(1 0C) AS WELL AS THE RELIEF U/S.89(1) IN RESPECT THEREOF. THE AMOUN T RECEIVED ON VOLUNTARY RETIREMENT IS NOTHING BUT PROFIT IN LIEU OF SALARY WITHIN THE MEANING OF THAT TERM IN SECTION 89(1) AND HENCE SUCH AMOUNT IS ALSO QUALIFIED FOR RELIEF U/S.89(1) OF I. T. ACT. IN VIEW OF THIS, THE ASSESSING OFFICER IS DIRECTED TO GRANT TH E RELIEF TO THE ASSESSEE. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLL OWING THE SAME REASONING, WE ARE NOT INCLINED TO INTERFERE WITH TH E FINDING OF CIT(A). WE UPHOLD THE SAME. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF MARCH, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 26 TH MARCH, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), KOLHAPUR 4) THE CIT, KOLHAPUR 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE