Sh. Manmohan Singh Bedi, Patiala V. ACIT, Patiala

ITA 507/CHANDI/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7788 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K P BAJAJ
• Keywords: Rectification of order; Benefit of exemption; Condonation of delay
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R. SOOD, AM AND MS. SUSHMA CHOWLA, JM ITA NO. 507/CHD/2012 ASSESSMENT YEAR: 2007-08 SHRI MANMOHAN SINGH BEDI V A.C.I.T. PATIALA # 59, PHASE III URBAN ESTATE PATIALA PAN: ADGPB 1886 N (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI K.P. BAJAJ RESPONDENT BY: SHRI AKHILESH GUPTA DATE OF HEARING: 23.07.2012 DATE OF PRONOUNCEMENT: 26.07.2012 ORDER PER T.R. SOOD, A.M IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUND: THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF EXEMPTIO N U/S 10(10C) OF THE INCOME-TAX ACT. 2. THE APPEAL HAS BEEN FILED LATE BY 541 DAYS. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY WHICH IS DULY SUPPORTED BY THE AFFIDAVIT. THE LD. COUNSEL OF THE ASSESSEE REFERRED TO THE APP LICATION AND POINTED OUT THAT ORIGINALLY THE ASSESSEE HAS FILED RETURN DECLARING INCOME OF RS. 13,10,521/- ON WHICH TOTAL TAX DUE INCLUDING INTEREST WAS RS. 80,9 50/-. LATER ON THIS RETURN WAS REVISED DECLARING TOTAL INCOME OF RS. 8,10,521/- AF TER CLAMING DEDUCTION U/S 10(10C) AMOUNTING TO RS. 5.00 LAKHS AND TOTAL TAX R EMAINED ONLY AT RS. 50,369/-. HOWEVER, THE ASSESSING OFFICER DID NOT A LLOW THE DEDUCTION U/S 10(10C) OF THE ACT. ACCORDINGLY RECTIFICATION APPL ICATION WAS MOVED FOR ALLOWING DEDUCTION U/S 10(10C). THE RECTIFICATION APPLICATI ON WAS REJECTED VIDE RECTIFICATION ORDER DATED 16.2.2010 ON WHICH TAX DU E WAS DETERMINED AT RS. 80,954/-. THE ASSESSEE WAS ADVISED NOT TO FILE THE APPEAL BECAUSE TOTAL BENEFIT WHICH THE ASSESSEE COULD HAVE RECEIVED WAS LESS THA N RS. 30,000/- AND THE ASSESSEE WAS ADVISED THAT AFTER PAYING FEE TO THE T RIBUNAL AND ADVOCATE FEE 2 NOTHING WOULD BE GAINED. ACCORDINGLY NO APPEAL WAS FILED. HOWEVER, LATER ON THE ASSESSING OFFICER PASSED ANOTHER RECTIFICATION ORDER U/S 154 ON 6.3.2012 IN WHICH NET TAX PAYABLE WAS SHOWN AT RS. 3,43,607/-. WHEN SUCH A HUGE DEMAND WAS RAISED THEN THE ASSESSEE WAS LEFT WITH N O OPTION BUT TO FILE APPEAL BEFORE THE TRIBUNAL. THEREFORE, THE APPEAL WAS FI LED LATE BECAUSE OF THE SUFFICIENT CAUSE AND THE SAME MAY BE CONDONED PARTI CULARLY IN VIEW OF THE FACT THAT THE ISSUE RAISED IN APPEAL IS COVERED IN FAVOU R OF THE ASSESSEE. 3. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE S UBMITTED THAT ONCE THE ASSESSEE HAD ACCEPTED THE DECISION BY NOT FILING AN Y APPEAL THEN LATER ON THE SAME COULD NOT BE MADE AS REASON FOR EXPLAINING THE DELAY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AN D WE ARE SATISFIED THAT THE ASSESSEE HAD A SUFFICIENT CAUSE FOR NOT FILING THE APPEAL IN TIME. THE ASSESSEE BEING AN EMPLOYEE MIGHT HAVE INITIALLY ACC EPTED THE DECISION OF THE DEPARTMENT BECAUSE ADDITIONAL TAX PAYABLE WAS ONLY RS. 30,000/- TO AVOID LITIGATION EXPENSES. HOWEVER, THE DEMAND HAS BEEN INCREASED TO RS. 3,43,607/- VIDE RECTIFICATION ORDER DATED 6.3.2012 THEN THE ASSESSEE WAS FORCED TO FILE THE APPEAL. WE ARE OF THE OPINION T HAT THIS IS REASONABLE AND SUFFICIENT CAUSE FOR FILING THE APPEAL LATE AND ACC ORDINGLY WE CONDONE THE DELAY. 5. AS FAR AS THE MERITS OF THE CASE ARE CONCERNED, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN CASE OF SHRI BIKRAN JIT PASSI V DCIT DATED 9.11.2011, IT A NO. 925/CHD/2011 A.Y 2008-09. IN THIS CASE THE TRIBUNAL HAS HELD AS UND ER:- THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER, DATED 14.07.2011 OF THE LD. CIT(A) PANCH KULA PASSED U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT HER EINAFTER REFERRED TO AS 'THE ACT') 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL : 1. THAT THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDI NG THE WITHDRAWAL OF EXEMPTION OF RS.5,00,000/- CLAIMED UN DER 3 SECTION 10(10C) OF THE ACT WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT THE LD. CIT(A) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THE EXIT OPTION SCHEME DOES NOT SATISFY THE CONDITIONS LAID UNDER SECTION 10(10 C) READ WITH RULE 2BA WHICH IS INCORRECT AND AS SUCH THE EXEMPTION WITHDRAWN AND UPHELD IS WHOLLY UNWARRANTE D. 3. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS UNTENABLE. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE BIKRAM JIT PASSI FILED RETURN OF INCOME, ON 11.08.2 008 FOR THE ASSESSMENT YEAR 2008-09. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAD CLA IMED EXEMPTION U/S 10(10C) OF THE ACT AMOUNTING TO RS.5, 00,000/-. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE'S AS NO T BEING ELIGIBLE FOR EXEMPTION U/S 10(10C) OF THE ACT. 4. THE CIT(A) UPHELD THE ORDER OF THE AO. THE RELE VANT FINDINGS OF THE CIT(A) ARE AS UNDER : KEEPING IN VIEW THE CLEAR CONDITIONS IN THE SCHEME REGARDING FILLING UP OF VACANCIES CAUSED BY THE REL EASE OF OFFICERS AND THE CONFIRMATION BY THE BANK AT POINT NO.10 ABOVE THAT THE SCHEME DOES NOT COMPLY WITH SECTION 10(10C) OF THE IT ACT AND IS NOT APPROVED BY INCOME TAX DEPARTMENT CONDITIONS NO. (III) & (IV) OF RULE 2BA ARE VIOLATED. THEREFORE, THE SCHEME IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(10C) OF THE IT ACT,1961. AS A RESULT, THE ASSESSEES ARE NOT HELD ELIGIBLE FOR EXE MPTION U/S 10(10C) OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED AND CONSIDERED THE FACTS OF THE APPEAL. THE LD. 'AR' P LACED RELIANCE, ON THE DECISION, IN THE CASE OF PANDYA VINOD CHANDR A BHOGILAE V ITO (2010) 045 DTR 105 ITAT, AHMEDABAD, TO STATE TH AT THE FACT- SITUATION OF THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION. HAVING CONSIDERED THE DECISION, WE FOUND THAT THE SAME IS APPLICABLE TO THE FACTS OF THE PRESENT CASES. T HE RELEVANT AND OPERATIVE PART OF THE DECISION IS REPRODUCED HEREUN DER : 2. THUS THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ABOUT ALLOWABILITY OF EXEMPTION UNDER SECTION 10(10C) OF THE INCOME TAX ACT, 1961. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A DEP UTY MANAGER IN SBI AND HAS TAKEN VRS ON 31-5-2006 UNDER EXIT OPTION SCHEME INTRODUCED BY THE BANK OF INDIA WITH EFFECT FROM 7-5-2005. THE ASSESSEE RECEIVED SALARY AND PEN SION AMOUNTING TO RS.3,81,894 (INCLUDING EXGRATIA). ON EXAMINATION OF FORM NO.16 THE ASSESSING OFFICER NOT ICED THAT ASSESSEE RECEIVED EXGRATIA OF RS.3,07,236 ON V RS. HE CLAIMED EXEMPTION UNDER SECTION 10(10C) OF THE A CT. 4 THE ASSESSING OFFICER DISALLOWED THE CLAIM BY FOLLO WING CIRCULAR NO. CHIEF CIT, BARODA LETTER BRD/CHIEF CIT/TECH/MICS/10(10C)/2009-10, DATED 17-6-2006. TH E ASSESSEE RELIED ON THE DECISION OF TRIBUNAL, KOLKAT A IN THE CASE OF DY.CIT V. KRISHNA GOPAL SAHA (2009) 29 DTR (KOL)(TM)(TRIB) 385 BUT THE LEARNED ASSESSING OFFIC ER DID NOT AGREE AND MADE THE ADDITION. THE LEARNED COMMISSIONER (APPEALS) ALSO CONFIRMED THE DISALLOWA NCE BY TRYING TO DISTINGUISH THE DECISION OF THIRD MEMBER IN DY.CIT V. KRISHNA GOPAL SAHAS CASE (SUPRA). 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. IN OUR CONSIDERED VIEW THE DISTINCTION CIT ED BY THE LEARNED COMMISSIONER (APPEALS) IS NOT SOUND AND DOE S NOT STAND TO REASON. THE ONLY BASIS FOR NOT ALLOWING T HE CLAIM HAS BEEN THAT SCHEME FOR VRS IS NOT IN ACCORDANCE W ITH RULE 2BA. HOWEVER,, IT HAS NOT BEEN POINTED OUT HO W THE EMPLOYER HAS NOT FRAMED THE SCHEME IN ACCORDANCE WI TH RULE 2BA. EARLIER TILL 2002 SCHEMES WERE REQUIRED TO BE APPROVED BY THE CHIEF COMMISSIONER BUT THEREAFTER S UCH REQUIREMENT HAS BEEN DISPENSED WITH AND, THEREFORE, IT IS ONLY FOR THE EMPLOYER TO FRAME THE SCHEME FOR VRS O R FOR EARLIER EXIT OPTION. IF ASSESSING OFFICER HAD ANY DOUBT ABOUT THE SCHEME HE COULD HAVE ENQUIRED FROM THE EMPLOYER. SO FAR AS THE ASSESSEE EMPLOYEE IS CONCE RNED, HE CANNOT BE PENALIZED AND TAX WILL BE LEVIED ON HI M ON THE ASSUMPTION THAT THE SCHEME FRAMED BY EMPLOYER IS NO T IN ACCORDANCE WITH RULE 2BA. IN ANY CASE, THE JUDGMEN T OF THIRD MEMBER IN DY.CIT V. KRISHNA GOPAL SAHA (SUPRA ) IS CLEARLY APPLICABLE AND WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW. FOR THE SAKE OF CONVENIENCE WE REF ER TO FOLLOWING PARA FROM THE THIRD MEMBER JUDGMENT IN DY .CIT V. KRISHNA GOPAL SAHAS CASE (SUPRA) AS UNDER : 5. AT THE TIME OF HEARING BEFORE ME, NONE APPEARED ON BEHALF OF THE ASSESSEE-RESPONDENT. I HAVE, THEREFORE, HEA RD THE LEARNED DEPARTMENT REPRESENTATIVE AND PERUSED THE MATERIAL PLACED BEFORE ME. I FIND THAT THE ISSUE H AS BEEN CONSIDERED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAIL DSP VR EMPLOYEES ASSOCIATION 1998 V. U NION OF INDIA (SUPRA) IN WHICH THEIR LORDSHIPS HELD AS U NDER : SECTION 10(10C) OF THE INCOME TAX ACT, 1961, USES T HE EXPRESSION ANY AMOUNT RECEIVED BY AN EMPLOYEE. AT THE TIME OF HIS VOLUNTARY RETIREMENT IN ACCORDANCE WITH ANY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT. IF A PL AIN LITERAL INTERPRETATION OF STATUTORY PROVISION PRODU CED A MANIFESTLY ABSURD AND UNJUST RESULT, WHICH THE LEGI SLATURE COULD NOT HAVE INTENDED, THE COURT IS SUPPOSED TO M ODIFY THE LANGUAGE USED BY THE LEGISLATURE EVEN TO DO SOM E VIOLENCE TO IT SO AS TO ACHIEVE THE OBVIOUS INTENTI ON OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. A N EXPRESSION USED IN THE STATUTE IS NOT ALWAYS TO BE INTERPRETED LITERALLY OR GRAMMATICALLY. SOMETIMES IT HAS TO BE INTERPRETED HAVING REGARD TO THE CONTEXT IN WHIC H THE EXPRESSION IS USED AND HAVING REGARD TO THE OBJECT AND PURPOSE FOR WHICH THE SAME IS ENACTED. SEC.10(10C) WAS INSERTED IN ORDER TO MAKE VOLUNTARY RETIREMENT ATTR ACTIVE SO AS TO REDUCE HUMAN COMPLEMENTS FOR SECURING ECONOMI C VIABILITY OF CERTAIN COMPANIES. THIS OBJECT WAS EL ABORATED 5 BY VARIOUS DEPARTMENTAL CIRCULARS AND EXPLANATORY STATEMENTS ISSUED FROM TIME TO TIME. SIMILARLY, RU LE 2BA OF THE INCOME TAX RULES, 1962, WHICH WAS INSERTED BY I T (SIXTEENTH AMENDMENT) RULES, 1962, WAS AMENDED FROM TIME TO TIME. ALL THESE GO TO SHOW THAT THIS WAS I NTENDED TO MAKE VOLUNTARY RETIREMENT MORE ATTRACTIVE AND BENEF ICIAL TO THE EMPLOYEE OPTING FOR VOLUNTARY RETIREMENT. THER EFORE, THIS HAS TO BE INTERPRETED IN A MANNER BENEFICIAL T O THE OPTEE FOR VOLUNTARY RETIREMENT, IF THERE IS ANY AMB IGUITY. SUMS PAID ON VOLUNTARY RETIREMENT TO THE EXTENT OF RUPEES FIVE LAKHS ARE EXEMPTED FROM BEING CHARGED T O TAX BY REASON OF SECTION 10(10C). EVEN IF THE PAYMENT IS STRETCHED OVER A PERIOD OF YEARS, THE SAME WOULD NO T BECOME CHARGEABLE TO TAX IN ANY SUBSEQUENT ASSESSME NT YEAR. FROM THE ABOVE IT IS EVIDENT THAT THEIR LORDSHIPS O F THE JURISDICTIONAL HIGH COURT HELD THAT AN EMPLOYEE, WH O TAKES VOLUNTARY RETIREMENT, IS ENTITLED TO DEDUCTION UNDE R SECTION 10(10C) EVEN IF THE PAYMENT IS STRETCHED OVER A PER IOD OF YEARS. THEY HAVE ALSO HELD THAT PROVISION OF SECTI ON 10(10C) SHOULD BE INTERPRETED IN A MANNER BENEFICIA L TO THE OPTEE FOR VOLUNTARY RETIREMENT. IT MAY BE POINTED OUT THAT IN THE ABOVE-MENTIONED CASE, THE EMPLOYER I.E. SAIL WA S OF THE OPINION THAT THE EMPLOYEES WERE NOT ENTITLED TO EXEMPTION UNDER SECTION 10(10C) AND ACCORDINGLY, SA IL HAD BEEN DEDUCTING TAX AT SOURCE ON THE AMOUNT PAID UND ER THEIR VOLUNTARY RETIREMENT SCHEME. THE FACTS ARE S IMILAR IN THE ASSESSES CASE, BECAUSE IN THE CASE OF THE ASSES SEE ALSO, THE EMPLOYER BELIEVING THAT THE ASSESSEE IS N OT ENTITLED TO DEDUCTION UNDER SECTION 10(10C) HAS DED UCTED TAX AT SOURCE ON THE AMOUNT PAID ON VOLUNTARY RETIR EMENT. THE FACTS BEING IDENTICAL, THE ABOVE DECISION OF HO N'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICA BLE TO THE CASE UNDER APPEAL BEFORE THE TRIBUNAL. 6. SIMILARLY, HON'BLE BOMBAY HIGH COURT IN THE CAS E OF CIT V. NAGESH DEVIDAS KULKARNI (SUPRA) HELD AS U NDER : THE ASSESSEE IS ENTITLED TO THE EXEMPTION UNDER SEC TION 10(10C) OF THE ACT AND ALSO REBATE UNDER SECTION 89 OF THE ACT IN RESPECT OF THE AMOUNT RECEIVED IN EXCESS OF RS.5,00,000 ON ACCOUNT OF VOLUNTARY RETIREMENT. THUS THEIR LORDSHIPS HAVE HELD THAT THE ASSESSEE, W HO OPTS FOR VOLUNTARY RETIREMENT, IS NOT ONLY ENTITLED TO EXEMPTION UNDER SECTION 10(10C) BUT ALSO REBATE UND ER SECTION 89 OF THE INCOME TAX ACT. SIMILAR VIEW IS TAKEN BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. P. SURENDRA PRABHU (SUPRA) WHEREIN THEIR LORDSHIPS HEL D AS UNDER : THAT THE ASSESSEE, EMPLOYEE OF THE RESPONDENT BANK WAS NOT ONLY ENTITLED TO THE BENEFIT OF EXEMPTION U NDER SECTION 10(10C) OF THE ACT TO THE EXTENT PRESCRIBED IN THE PROVISION ITSELF BUT FOR ANY AMOUNT OVER AND ABOVE THE PRESCRIBED LIMIT; UNDER THE AFORESAID PROVISION, TH E ASSESSEE WAS ALSO ENTITLED TO RELIEF UNDER SECTION 89(1) OF THE ACT READ WITH RULE 21A. 6 6. FROM THE ABOVE IT IS EVIDENT THAT WHILE THE L EARNED AM RELIED UPON THE DECISION OF HON'BLE MADRAS HIGH CO URT IN THE CASE OF CIT V. M.CHELLADURAI & ORS. (2009) 317 ITR 370(MAD) : (2009) 176 TAXMAN 31, HE HAS NOT TAKEN I NTO ACCOUNT THE DECISIONS OF OTHER HIGH COURTS INCLUDIN G THE JURISDICTIONAL HIGH COURT. THE HON'BLE JURISDICTIO NAL HIGH COURT UNDER THE IDENTICAL FACTS HELD THE ASSESSEE, I.E., THE RETIRED EMPLOYEE, TO BE ENTITLED TO DEDUCTION UNDER SECTION 10(10C). SIMILAR VIEW IS TAKEN BY HON'BLE BOMBAY A S WELL AS KARNATAKA HIGH COURTS. THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IS BINDING UPON US AND MO REOVER IF TWO VIEWS ARE POSSIBLE, WHILE INTERPRETING THE PROV ISION, A VIEW WHICH IS FAVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED. HON'BLE JURISDICTIONAL HIGH COURT IN THE ABOVE- REFERRED CASE OF SAIL DSP VR EMPLOYEES ASSOCIATION 1998 V. UNION OF INDIA (SUPRA) HAS ALSO HELD THAT THE PR OVISIONS OF SECTION 10(10C) ARE TO BE INTERPRETED LIBERALLY IN A MANNER WHICH IS BENEFICIAL TO RETIRED EMPLOYEES IN VIEW OF THE ABOVE. I RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT, BOMBAY HIGH COURT AND KA RNATAKA HIGH COURT AGREE WITH THE LEARNED JM AND HOLD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 10( 10C) TO THE EXTENT OF RS.5 LAKHS. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL, WE ALLOW THE CLAIM OF ASSESSEE. 6. THE ISSUE IN QUESTION IS COVERED BY THE DECISION OF THE HON'BLE TRIBUNAL, AS REPRODUCED ABOVE. THE ASSESSEE/APPELLANT WAS ALSO EMPLOYED IN THE STATE B ANK OF INDIA. RESPECTFULLY FOLLOWING THE SAID DECISION, TH E APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. 6. FOLLOWING THE ABOVE DECISION WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON 26 .07. 2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26.07.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 7