Avinash Ramchandra Gholap, Pune V. ITO, Ward 7(2), Pune

ITA 553/PUN/2013

• Counselvise Citation: 55324514 RSA 2013
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K M ODI SHRI WALIMBE
• Keywords: Additional evidence; Benefit of exemption
• Section: 234B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.553/PN/2013 A.Y. 2008-09 AVINASH RAMCHANDRA GHOLAP B3/15, SARITA VAIBHAV, OPP. DEEPAK NITRATE, SINHAGAD ROAD, PUNE 411030 PAN: ACRPG4088K APPELLANT VS. INCOME TAX OFFICER, WARD 7(2), PUNE RESPONDENT APPELLANT BY : SHRI M.K. K ULKARNI RESPONDENT BY : SHRI A.K . MODI, SHRI WALIMBE DATE OF HEARING: 23.10.2013 DATE OF ORDER : 28.10.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III [(I N SHORT CIT(A)- III], PUNE DATED 30-06-2011 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS. 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE APPE AL OF THE ASSESSEE RESULTANTLY CONFIRMING THE DISALLOWANCE OF CLAIM OF EXEMPTION U/S. 10(10C) OF THE ACT. SINCE THE AS SESSEE HAD DULY COMPLIED ALL THE CONDITIONS OF RULE 2BA TH E ASSESSEE WAS ENTITLED TO CLAIM SUCH EXEMPTION AND I T BE ALLOWED TO THE ASSESSEE. 2 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW AND IN VIEW OF JURISDICTIONAL HIGH COURT JUDGMENT A ND VARIOUS JUDGMENTS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL THE CLAIM OF EXEMPTION HAVING PROPERLY MAD E BE ALLOWED TO THE APPELLANT. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. A.O. ERRED IN RESORTING TO ACTION U/S. 147 OF T HE ACT AND SO CONFIRMED BY LD. CIT(A) AS THE CLAIM OF EXEM PTION MADE U/S. 10(10C) WAS PERFECTLY LEGAL ALSO IN VIEW OF SUBSEQUENT JUDICIAL PRONOUNCEMENTS. THE ACTION BEI NG ILLEGAL BE VACATED. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE APPEAL IS DELAYED IN VIEW OF WRONG ADVICE RECEIVED BY THE ASSESSEE. OTHERWISE ALSO THE CLAIM BEING LEGAL AND ALLOWABLE THE DELAY BE CONDONED AND APPEAL BE ADMIT TED FOR ADJUDICATION AFTER CONDONING THE DELAY. THE DE TAILED AFFIDAVIT WITH A PRAYER TO CONDONE THE DELAY WILL B E FILED LATER ON. 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEVY OF INTEREST U/S. 234A, 234B AND 234C IS NOT JU STIFIED AND IN THE CIRCUMSTANCES IT BE DELETED. 2. AT THE OUTSET OF HEARING, LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE APPEAL IS FILED LATE BY 464 DAYS. IN THIS REGARD, IT WAS SUBMITTED ON BEHALF O F ASSESSEE THAT THE DELAY IN FILING OF THE APPEAL BECAUSE OF WRONG ADVICE RECEIVED BY THE ASSESSEE AND BECAUSE OF UNCERTAINTY ON THE I SSUE AT HAND AT RELEVANT POINT OF TIME. THE CIT(A) DECIDED THE APPEAL ON 23-09- 2011, SO THE APPEAL SHOULD BE PREFERRED WITHIN 60 D AYS I.E. ON OR BEFORE 23-11-2011 WHICH WAS ACTUALLY FILED ON 28-02 -2013 AND DELAY IS OF 464 DAYS. 2.1. THE ASSESSEE WAS AN EMPLOYEE OF STATE BANK OF INDIA AND VOLUNTARILY RETIRED FROM SERVICE UNDER EXIT OPTION SCHEME. THE ASSESSEE CLAIMED THE BENEFIT OF EXEMPTION FOR THE E X-GRATIA AMOUNT RECEIVED FROM HIS EMPLOYER U/S. 10(10C). TH E GENERAL OPINION WAS FOUND BY ALL HIS COLLEAGUES IS THAT IT WAS NOT BENEFICIAL TO FILE AN APPEAL BEFORE ITAT AND THEREF ORE AN IDEA OF FILING THE APPEAL WAS DROPPED AND NO APPEAL THEREFO RE FILED. THE 3 ASSESSEE FURTHER BROUGHT TO OUR NOTICE THROUGH LEAR NED AUTHORIZED REPRESENTATIVE THAT SUBSEQUENTLY MANY OF HIS FRIENDS HAVE FILED APPEALS BEFORE TRIBUNAL WHICH WERE DECID ED IN FAVOUR OF ASSESSEE IN SEPTEMBER, 2012. SOME OF THE APPEALS W ERE DECIDED ON 26-06-2012, WHEREIN ITAT WAS PLEASED TO SET ASID E THE ORDER GIVING SUITABLE DIRECTIONS IN THE MATTER, BUT WHICH WERE SUBSEQUENTLY MODIFIED AS PER PROVISIONS OF SECTION 254. THE PROCEEDINGS DECIDED ON 05-09-2013 DIRECTING THAT PR ECEDENTS OF THE TRIBUNAL BE CONSIDERED AND APPLIED WHILE IMPLEM ENTING ORDER OF THE ITAT DATED 26-12-2011. THE ASSESSEE FURTHER INFORMED THAT HE DID NOT APPEAL BEFORE TIME BECAUSE OF WRONG ADVICE RECEIVED BY HIM FROM HIS FRIENDS AT RELEVANT POINT OF TIME. BUT THEREAFTER IN THE LIGHT OF SUBSEQUENT DEVELOPMENTS IN FAVOUR OF ASSESSEE, SO IT WAS DECIDED TO FILE APPEAL, WHICH I S REASON FOR DELAY IN FILING THIS APPEAL. 2.2. TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSID ERATION, WE FIND THAT IT BE A FIT CASE FOR CONDONING THE DELAY AS DISCUSSED ABOVE. 3. ON MERIT, WE FIND THAT THIS APPEAL IN THE ISSUE IS COVERED BY VARIOUS JUDGMENTS OF ITAT, ONE OF THE SAME BEING DE CIDED BY PUNE A BENCH IN ITA NO.1460/PN/2011, A.Y. 2006-07 IN THE CASE OF SHRI ANIL V. BARDE, WHEREIN THE TRIBUNAL HA S DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 3. HAVING HEARD THE PARITIES AND PERUSING THE MATER IAL ON RECORD, WE FIND THAT THE CIT(A) WAS NOT JUSTIFIED I N UPHOLDING THE ACTION OF THE AO. ON MERITS, WE FIND THAT THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KO ODATHIL KALLYATAN AMBUJAKSHAN (2009) 309 ITR 113 (BOM) WHER EIN THE AMOUNT RECEIVED UNDER OPTIONAL EARLY RETIREMENT SCHEME, WHICH WAS FLOATED BY RBI WAS HELD TO BE APP LICABLE TO ALL THE EMPLOYEES WHO HAVE SERVED FOR 25 YEARS A ND HAD 4 ATTAINED THE AGE OF 50 YEARS. IT WAS AIMED AT REDU CTION IN THE EXISTING STRENGTH OF EMPLOYEES AND VACANCIES CA USED WERE NOT FILLED UP. THE QUESTION OF EMPLOYING RETIR ED EMPLOYEES WITH ANOTHER CONCERN OF SAME MANAGEMENT D ID NOT ARISE AS RBI HAD NONE. IN THIS BACKGROUND, IT WAS HELD AS UNDER: FIRSTLY THE OERS SATISFIES THE FIRST TEST OF R. 2B A NAMELY 10 YEARS OF SERVICE AND 40 YEARS OF AGE. IN THE INSTAN T CASE IT IS 25 YEARS OF SERVICE AND 50 YEARS OF AGE. SECONDLY I T APPLIES TO ALL EMPLOYEES. THIS MEETS THE SECOND REQUIREMENT . THE THIRD REQUIREMENT IS THAT THE SCHEME HAS BEEN DRAWN TO RESULT IN OVERALL REDUCTION IN THE EXISTING STRENGT H OF THE EMPLOYEES. THIS HAS NOT BEEN EXPRESSLY STATED IN TH E SCHEME. HOWEVER, THE OBJECT BEHIND S. 10(10C) AND T HE NOTE PUT UP BEFORE THE GOVERNOR AT THE TIME WHEN THE SCH EME WAS FRAMED HAS TO BE NOTED. THE MATERIAL ON RECORD WOULD INDICATE THAT THE EMPLOYEES HAD BEEN RENDERED SURPL US ON ACCOUNT OF VARIOUS STEPS TAKEN BY THE EMPLOYER. THE SCHEME, THEREFORE, WAS MEANT FOR AN OVERALL REDUCTION IN TH E EXISTING STRENGTH OF THE EMPLOYEES. THE THIRD REQUIREMENT IS ALSO, THEREFORE, SATISFIED. THE FOURTH REQUIREMENT WAS TH E VACANCY CAUSED BY THE VOLUNTARY RETIREMENT OR VOLUNTARY SEP ARATION IS NOT TO BE FILLED UP. A FINDING OF FACT HAS BEEN RECORDED BY THE TRIBUNAL ON THAT COUNT WHICH IS NOT CHALLENGED IN TERMS OF THE QUESTIONS OF LAW AS FRAMED BY THE REVENUE. S ECONDLY THERE WAS MATERIAL ON RECORD WHICH SHOWS THAT THE S CHEME BASICALLY WAS TO REDUCE THE EMPLOYEE STRENGTH AS PO STS HAD BECOME SURPLUS ON ACCOUNT OF REORGANIZATION. ONE CA NNOT FILL IN THE POSTS WHICH HAVE BECOME SURPLUS AS THE POSTS HAVE BECOME REDUNDANT. ALSO ADDITIONAL EVIDENCE TAKEN ON RECORD UNDER S. 260A(7) WOULD SHOW THAT NONE OF THESE POST S FROM THE DAY THE SCHEME CAME INTO FORCE TILL 2008 HAVE B EEN FILLED 5 IN. IN OTHER WORDS THE FOURTH REQUIREMENT HAS ALSO BEEN SATISFIED. INSOFAR AS THE FIFTH REQUIREMENT IS CONC ERNED, THE TRIBUNAL HAS ALREADY ANSWERED THE ISSUE AND THAT FI NDING OF FACT IS NOT IN ISSUE. EVEN OTHERWISE CONSIDERING TH AT THE RBI IS A STATUTORY BODY CREATED UNDER AN ACT THERE IS N O OTHER COMPANY OR CONCERN BELONGING TO THE SAME MANAGEMENT . THE FIFTH REQUIREMENT HAS ALSO BEEN SATISFIED. THE SIXTH REQUIREMENT HAS ALSO BEEN SATISFIED AS IN THE INSTA NT CASE WHAT IS OFFERED IS TWO MONTHS SALARY FOR EACH COMPL ETED YEAR OF SERVICE. THUS THE SCHEME EXPRESSLY OR IMPLIEDLY SATISFIED ALL THE REQUIREMENTS OF THE SECTION AS WELL AS THE GUIDELINES FRAMED FOR THE PURPOSE OF S. 10(10C) NAMELY, R. 2BA . THE CBDT CIRCULAR DT. 26TH SEPT. OCT., 2005 TOOK NOTE O F THE LETTER WRITTEN BY THE RBI. THAT LETTER BY ITSELF WO ULD NOT BE OF MUCH CONSEQUENCES AS THE OERS ITSELF NOTES THAT INC OME- TAX IF ANY WOULD BE PAYABLE BY THE EMPLOYEE. EVEN I N THE NOTE PUT UP BY THE DEPARTMENT FOR INTRODUCTION OF T HE SCHEME FOR CONSIDERATION OF THE GOVERNOR IT WAS MAD E CLEAR THAT IF ANY INCOME-TAX IS PAYABLE THAT WILL BE PAID BY THE EMPLOYEE AND IT WAS FURTHER MADE CLEAR THAT THE PAY MENT IS SUBJECT TO PROVISIONS OF S. 10(10C). THE LETTER, TH EREFORE, BY RBI BY ITSELF WOULD NOT BE DETERMINATIVE AS TO WHET HER THE INCOME IS LIABLE TO TAX. ONE HAS TO SEE THE SCHEME FRAMED IN TERMS OF S. 10(10C) AND WHETHER IT SATISFIES THE GU IDELINES IN TERMS OF R. 2BA. THE COURT IS NOT PRECLUDED TO CONS IDER THE ISSUE IRRESPECTIVE OF THE CBDT CIRCULAR. ON EXAMINA TION OF THE ISSUE IT WOULD BE CLEAR THAT THE GUIDELINES HAV E TO BE READ IN CONFORMITY WITH THE, STATUTORY PROVISIONS. ON THE FACTS IN THE INSTANT CASE, THE TRIBUNAL HAS RECORDE D A FINDING THAT THE PREDICATES OF THE RULE HAVE BEEN SATISFIED . ON A PROPER CONSTRUCTION OF THE RULES THAT THE SCHEME IT SELF MAY NOT EXPRESSLY STATE ALL THE TERMS AS IT IS POSSIBLE FOR THE COURT TO READ THE IMPLIED TERMS OF THE SCHEME. IN T HE INSTANT 6 CASE THEY HAVE BEEN SO READ.-CIT VS. HERO CYCLES (P ) LTD. (1997) 142 CTR (SC) 122 : (1997) 228 ITR 463 (SC), UCO BANK VS. CIT (1999) 154 CTR (SC) 88 : (1999) 237 IT R 889 (SC), CST VS. INDRA INDUSTRIES (2001) 168 CTR (SC) 50 : (2001) 248 ITR 338 (SC) AND CIT VS. GWALIOR RAYON S ILK MILL MFG. CO. LTD. (1992) 104 CTR (SC) 243 4. FOLLOWING THE AFORESAID PRECEDENT, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO GRANT EXEM PTION U/S 10(10) OF THE ACT TO THE ASSESSEE. 4. NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE. FAC TS BEING SIMILAR, SO FOLLOWING THE SAME REASONING WE SET ASI DE THE ORDER OF THE CIT(A) AND IN LIGHT OF ABOVE LEGAL DISCUSSION, THE ASSESSING OFFICER IS DIRECTED TO GRANT THE EXEMPTION U/S. 10( 10C) OF THE ACT AS PRAYED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THE DAY OF 28 TH OCTOBER 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 28 TH OCTOBER 2013 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-III, PUNE 4) THE CIT-III, PUNE 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE