GURUPRASAD GOPAL PENDSE, MUMBAI V. ITO 26(1)(3), MUMBAI

ITA 6056/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75711 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 25-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 15-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV JAIN
• Assessee Lawyers: ANIL J SATHE
• Section: 143(3)

Judgement Text

, MH MHMH MH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. , LAT; XXZ LAT; XXZ LAT; XXZ LAT; XXZ BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANJAY GA RG,JUDICIAL MEMBER /. ITA NO.6056/MUM/2013, ! ! ! ! / ASSESSMENT YEAR-2008-09 GURUPRASAD GOPAL PENDSE 14, AMITA CO. OP. HSG. SOC., DARYASARANG K. ANGRE MARG, KOLDONGRI, ANDHERI(E), MUMBAI-400069 VS ITO- 26(1) (3), MUMBAI. PAN:AACPP6162A ( '# / APPELLANT) ( $%'# / RESPONDENT) &' ( ) / ASSESSEE BY : SHRI ANIL J. SATH E ( ) / REVENUE BY : SHRI SANJEEV JAIN ( (( ( '* '* '* '* / DATE OF HEARING : 27-02-2014 +,! ( '* / DATE OF PRONOUNCEMENT : 07-03-2014 , 1961 ( (( ( 254 )1( '-' '-' '-' '-' . . . . ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM : CHALLENGING THE ORDER DT.30.09.2013 OF THE CIT(A)-2 8,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY HOLDING THAT THE SCHEME OF THE EMPLOYER NEW INDIA CO. OP. BANK (NIVRS 2007) DOES NOT HAVE AN INCOME TAX EXEMPTION. IN VIEW OF THE CL AUSE BY CLAUSE COMPLIANCE SUBMITTED BY THE ASSESSEE, ON MERITS, THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) SHOULD BE QUASHED. 2. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY HOLDING OUT THAT THE EMPLOYER NEED TO ST ATE THAT VRS SCHEME FRAMED IS IN COMPLIANCE TO RULE 2BA OF THE INCOME TAX ACT 1962. IN VIEW OF THE CLAUSE BY CLAUSE COMPLIANCE SUBMITTED BY THE ASSESSEE, ON MERITS, THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) SHOULD BE QUASHED. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY HOLDING OUT THAT THE SCHEME IS APPLICABL E ONLY TO CERTAIN CLASS OF EMPLOYEES AND THE POLICY ABOUT VACANCIES CAUSED IS NOT MENTIONED IN T HE VRS SCHEME AND HENCE IT IS NOT COMPLYING RULE 2BA R.W.S. 10(10C) OF THE INCOME TAX ACT. IN V IEW OF THE CLAUSE BY CLAUSE COMPLIANCE SUBMITTED BY THE ASSESSEE, ON MERITS, THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) SHOULD BE QUASHED. 4. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY HOLDING OUT THAT THE SCHEME IS NOT COVER ED BY THE JURISDICTIONAL HIGH COURT JUDGMENT REPORTED IN 309 ITR 113 IN THE CASE OF K.K.AMBUJAKS HAN FURTHER CONFIRMED BY SUPREME COURT AND ACCEPTED BY CBDT. IN VIEW OF THE CLAUSE BY CLAUSE C OMPARISON SUBMITTED BY THE ASSESSEE WITH THIS HIGH COURT JUDGMENT, THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) SHOULD BE QUASHED. 2 ITA NOS. 6056/MUM/2013 GURUPRASAD GOPAL PENDSE . 5. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY IGNORING THE JUDGMENTS OF CALCUTTA HIGH COURT IN THE CASE OF SAIL DSP, CALCUTTA TRIBUNAL SPECIAL BENCH IN THE CASE OF KRISHNA GOPAL SAHA AND OTHER JUDICIAL PRONOUNCEMENTS. THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) SHOULD BE QUASHED. 6. YOUR APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AM END OR DELETE ANY OF THE FOREGOING GROUND OF APPEAL. 2 .ASSESSEE, AN INDIVIDUAL,FILED HIS RETURN OF INCOME ON 23.07.2008 DECLARING TOTAL INCOME OF RS. 2. 44 LACS.ASSESSING OFFICER(AO) FINALISED THE ASSESSM ENT U/S. 143(3) R.W.S. 147 OF THE ACT ON 22.03. 2013,DETERMINING THE INCOME OF THE ASSESSEE AT RS.7 .44 LACS. 2.1 .DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD T AKEN VOLUNTARY RETIREMENT FROM NEW INDIA CO-OPERATIVE BANK LTD. AND HAD RECEIVED COMPENSATIO N OF RS. 6.01 LACS. AO FOUND THAT OUT OF THE SAID COMPENSATION THE ASSESSEE HAD CLAIMED EXEMPTIO N U/S.10(10C) OF THE ACT OF RS. 5 LACS. AO ASKED THE ASSESSEE AS TO WHY THE EXEMPTION CLAIMED BY HIM SHOULD NOT BE DISALLOWED.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DATED 01 .03.2013 AO HELD THAT NEW INDIA CO- OPERATIVE BANK LTD. I.E. THE EMPLOYER-BANK HAD NOT COMPLIED WITH THE PROVISIONS OF RULE 2BA OF THE INCOME-TAX RULES 1962(RULES), THAT EMPLOYEES OF THE SAID BANK WERE NOT ENTITLED FOR EXEMPTI -ON CLAIMED BY THEM U/S.10(10C) OF THE ACT, THAT TH E BANK HAD DEDUCTED TAX AT SOURCE ON THE ENTIRE PAYMENT MADE TO ITS EMPLOYEES,THAT CLAIM MADE BY TH E ASSESSEE WAS NOT AS PER THE PROVISIONS OF LAW. 2.2 ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPE LLATE AUTHORITY (FAA).AFTER CONSIDERING THE CLAUSE 5-11 OF NEW INDIA BANK VOLUNTARY RETIREMENT SCHEME-2007,HE HELD THAT THE SCHEME DID NOT CARRY ANY INCOME TAX EXEMPTION, THAT IT DID NOT COVER ALL THE EMPLOYEES OF THE BANK, THAT IT WAS APPLICABLE FOR THE EMPLOYEES IN MANAGERIAL RANKS AN D GROUND D EMPLOYEES ONLY, THAT EMPLOYER HAD DEDUCTED TDS ON THE ENTIRE PAYMENT TO THE ASSES SEE, THAT DEDUCTION OF TAX BY THE BANK PROVES THAT VRS WAS NOT TAX EXEMPTED IN THE OPINION OF THE BANK, THAT THERE WAS NO MENTION IN THE POLICY ABOUT THE FACT THAT VACANCIES CAUSED ON ACCOUNT OF RETIREMENT WOULD NOT BE FILLED AND VRS WAS DONE WITH A VIEW TO RESULT IN OVERALL REDUCTION IN THE EXISTING STRENGTH OF THE EMPLOYEES. FAA HELD THAT JUDGMENT DELIVERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASES OF KODATHIL KALLYATAN AMBUSLAKSHAN,WAS NOT APPLICABLE IN THE CASE UNDER C ONSIDERATION. FINALLY HE UPHELD THE ORDER OF THE AO. 2.3. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT CBDT HAD ISSUED CIRCULAR ON 26. 11.1992 (CIRCULAR NO. 640), THAT IN ANSWER TO QUEST ION NO.9 OF THE CIRCULAR IT WAS CLARIFIED THAT IF VRS COULD BE APPLICABLE CERTAIN SECTION OF EMPLOYEE S EVEN THEN BENEFITS WOULD BE AVAILABLE TO THE EMPLOYEES.HE RELIED UPON THE CASES OF KRISHNA G OPAL SAHA, PANDYA VINOD CHANDRA BHOGILAL, SHRI BIKRAMJIT PASSI.DEPARTMENTAL REPRESENTATIVE(DR ) REFERRED TO THE ORDER OF THE HONBLE HIGH COURT OF KOLKATA DELIVERED IN THE CASE OF SAIL DSP VR EMPLOYEES ASSOCIATION 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE WAS AN EMPLOYEE OF NEW INDIA CO-OPERATIVE BANK LTD. AND HAD OPTED FOR VOLUNTARY RETIREMENT,THAT ON HIS VOLUNTARY RETIREMENT HE RECE IVED A SUM OF RS.6.01 LAKHS,THAT CLAIM MADE HIM WAS REJECTED BY THE AO AND THE FAA.WE FIND THAT FAA HAS DECIDED THE ISSUE ON THE BASIS OF THE FACTS THAT WERE TOTALLY IRRELEVANT.DOWNSIZING O F STAFF CANNOT BE THE PURPOSE OF ANY VRS. HERE,WE WOULD LIKE TO REFER TO THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT DELIVERED IN THE CASE OF SAIL DSP VR EMPLOYEES ASSOCIATION 1998 WHER EIN IT HAS BEEN HELD THAT SECTION 10(10C) WAS INSERTED IN ORDER TO MAKE VRS ATTRACTIVE,SO AS TO REDUCE HUMAN COMPLEMENTS FOR SECURING ECONOMIC VIABILITY OF CERTAIN COMPANIES,THAT SAID P RINCIPLE WAS ELABORATED BY VARIOUS DEPARTMENT -AL CIRCULARS AND EXPLANATORY STATEMENTS ISSUED FRO M TIME TO TIME,THAT RULE 2BA OF THE RULES, WAS AMENDED ON VARIOUS OCCASIONS FOR THAT PURPOSE,THAT ALL THE FACTORS SHOWED THAT PROVISION WERE INSERTED IN THE ACT TO MAKE VRS MORE ATTRACTIVE AND BENEFICIAL TO THE EMPLOYEE OPTING FOR VOLUNTARY RETIREMENT, THAT PROVISIONS HAD TO BE INT ERPRETED IN A MANNER BENEFICIAL TO THE OPTEE,IF 3 ITA NOS. 6056/MUM/2013 GURUPRASAD GOPAL PENDSE . THERE IS ANY AMBIGUITY.AS PER THE COURT,RULE 2BA PR ESCRIBED THE MONETARY LIMIT.(262ITR638).WE FURTHER FIND THAT IN THE CASES OF Y.S.C.BABU & A.V. S. RAGHAVAN EMPLOYEES OF SYNDICATE BANK,HONBLE HIGH COURT OF AP HAD HELD THAT THEY WE RE ENTITLED TO CLAIM EXEMPTION U/S.10 (10C) OF THE ACT.SYNDICATE BANK IS ONE OF THE COMMERCIAL BANK LIKE THE SBI.THUS,THERE IS NO JUSTIFICA - TION FOR DIFFERENTIATING BETWEEN THE RBI AND A COMM ERCIAL BANK.WHAT IS TO BE SEEN IS WHETHER THE INTERPRETATION ADOPTED IS BENEFICIAL TO THE OPTEE O R NOT ? WE FURTHER FIND THAT A BENCH OF MUMBAI TRIBUNAL HAS ,IN THE CASES OF UMA SUBRAMANIAN & TWO OTHERS(ITA NOS.3120,3122 & 3468/MUM/ 2012),DEALT TH E ISSUE OF VRS OF THE SBI EMPLOYEES AND APPLICABILITY OF THE PROVISIONS OF SECTION 10(10C) OF THE ACT.IN ITS ORDER DATED 10.08.2012, TRIBUNAL HAS HELD AS UNDER : 2.ALL THE THREE ASSESSEES IN THE PRESENT CASES ARE EX-EMPLOYEES OF THE STATE BANK OF INDIA (IN SHORT SBI). THEY OPTED FOR VOLUNTARY RETIREMENT SCHEME AS PER STAFF EXIT SCHEME OF THEIR EMPLOYER SBI AND IN THE RETURNS OF INCOME FILED FOR THE YEAR UND ER CONSIDERATION, EXEMPTION OF RS 5 LAKHS WAS CLAIMED BY THEM U/S.10(10C) OF THE INCOME-TAX ACT, 1961. IN THE ASSESSMENTS COMPLETED U/S.143(3), THE AO ALLOWED THE EXEMPTION CLAIMED BY THE ASSESSE E U/S.10(10C) IN VIEW OF THE DECISION OF HON'BLE BOMBAY HIGH COURT IN WP NO.1051 OF 2010 IN THE CASE OF RAVIKANT G. SETH VS. CIT RENDERED VIDE ORDER DATED 23.08.2010. BY THE SAID O RDER, CIT-2, THANE WAS DIRECTED BY THE HON'BLE BOMBAY HIGH COURT TO CONSIDER WHETHER THE P ETITIONER WAS ENTITLED TO EXEMPTION U/S.10(10C) OF THE ACT AND THE RULES MADE UNDER THE INCOME-TAX RULES, 1962. AS PER THE DIRECTION OF HON'BLE BOMBAY HIGH COURT, THE LD. CIT-2, THANE PASSED AN ORDER U/S.264 ALLOWING THE CLAIM OF THE ASSESSEE NAMELY SHRI RAVI KANT SETH U/S.10(1 0C) OF THE ACT. 3.SUBSEQUENTLY, THE LD. CIT-26, MUMBAI CAME ACROSS THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF SBI EXIT OPTEES VS. UNION OF INDIA A ND OTHERS (WP NO.2129 OF 2007) WHEREIN THEIR LORDSHIPS HAD TAKEN NOTE OF REQUIREMENT OF RULE 2BA ACCORDING TO WHICH THE VACANCY CAUSED BY THE VOLUNTARY RETIREMENT WAS NOT TO BE FILLED-UP IN ORDER TO AVAIL THE BENEFIT OF SEC.10(10C). IT WAS ALSO NOTED THAT AS PER THE RELEVANT PROVISION OF CL AUSE 14 OF THE STAFF EXIT SCHEME OF SBI, THE EXIT OPTION WAS AIMED AT IMPROVING THE LEVEL OF MORAL IN THE BANK AND NOT AT RIGHTSIZING AND THE BANK WAS TO HAVE DISCRETION TO FILL- UP THE VACANCIES CA USED BY RELEASE OF OFFICERS UNDER THE EXIT OPTION. AFTER TAKING NOTE OF RULE 2BA AS WELL AS THE PROVIS IONS OF CLAUSE 14 OF STAFF EXIT SCHEME, THE HON'BLE BOMBAY HIGH COURT HELD THAT IF THE PETITION ERS WERE AGGRIEVED BY THE SAID CLAUSE OR THE RULE, IT WOULD BE OPEN TO THEM TO INDEPENDENTLY PUR SUE WHATEVER REMEDY THEY MAY HAVE AT LAW. ACCORDING TO THE LD. CIT, THE DECISION OF HON'BLE B OMBAY HIGH COURT IN THE CASE OF SBI EXIT OPTEES (SUPRA) WAS IN FAVOUR OF THE REVENUE AND THE ASSESSMENT ORDERS PASSED BY THE AO U/S.143(3) IN THE CASES OF THE ASSESSEES WERE ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE INASMUCH AS DEDUCTION U/S.10(10C) AMOUNTING TO RS. 5 LAKHS WAS WRONGLY ALLOWED TO THEM. HE, THEREFORE, SET ASIDE THE SAID ORDERS WITH A DIRECTI ON TO THE AO TO FRAME THE SAME DE NOVO AFTER WITHDRAWING EXEMPTION OF RS.5 LAKHS GRANTED TO THE ASSESSEES U/S.10(10C) OF THE ACT AS THE REQUIREMENT OF RULE 2BA OF IT RULES WAS NOT SATISFI ED. AGGRIEVED BY THE ORDERS OF THE LD. CIT PASSED U/S.263 SETTING ASIDE AND REVISING THE ORDER S OF THE AO, THE ASSESSEES HAVE PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 4.WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. ALTHOUGH THE LD. DR HAS STRONGLY RELIED ON THE IMPU GNED ORDERS OF THE LD. CIT PASSED U/S.263 IN SUPPORT OF THE REVENUE'S CASES, IT IS OBSERVED THAT IN PARAGRAPH NO.5 OF THE SAID ORDERS, THE LD. CIT HIMSELF HAS STATED THAT NOTHING HAS BEEN DECIDED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SBI EXIT OPTEES (SUPRA) AS TO THE ADMISSIBILITY OF THE CLAIM OF THE PETITIONER U/S.10(10C). WHAT THE HON'BLE BOMBAY HIGH COURT HELD WAS THAT THE CLAUSE 14 OF THE SBI EXIT SCHEME WAS NOT IN CONFORMITY WITH RULE 2BA OF THE INCOME-TAX RULES AN D IT WAS LEFT OPEN TO THE PETITIONER AGGRIEVED BY THE SAID CLAUSE OR THE RULE TO INDEPENDENTLY PUR SUE WHATEVER REMEDY THEY MAY HAVE AT LAW. 5.AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS CITED VARIOUS DECISIONS OF THE TRIBUNAL WHEREIN A SIMILAR ISSUE RELATING TO TH E ASSESSEE'S CLAIM FOR EXEMPTION U/S.10(10C) HAS BEEN CONSIDERED AND DECIDED ON MERIT IN FAVOUR OF T HE ASSESSEE. IN ONE OF SUCH DECISIONS RENDERED 4 ITA NOS. 6056/MUM/2013 GURUPRASAD GOPAL PENDSE . IN THE CASE OF PANDYA VINODCHANDRA BHOGILAL VS. ITO 45 DTR 105, AHEMADABAD BENCH OF THE ITAT HELD THAT CLAIM FOR EXEMPTION U/S.10(10C) CANN OT BE DENIED ON THE GROUND THAT THE SCHEME OF VOLUNTARY RETIREMENT FRAMED BY THE EMPLOYER IS NOT IN ACCORDANCE WITH THE RULE 2BA. FOR THIS CONCLUSION, THE AHMEDABAD BENCH RELIED ON THIRD MEM BER DECISION OF THE KOLKATA BENCH OF THE ITAT IN THE CASE OF DY. CIT V. KRISHNA GOPAL SAHA 2 9 DTR 385 WHEREIN IT WAS HELD THAT THE ASSESSEE, WHO HAD EXERCISED THE OPTION FOR RETIREME NT UNDER THE SCHEME FLOATED BY THE EMPLOYER BANK AND HAD RECEIVED THE COMPENSATION FROM THE EMP LOYER BANK, WAS ENTITLED TO EXEMPTION U/S.10(10C) EVEN THOUGH THE SAID SCHEME WAS NOT IN CONFORMITY WITH THE REQUIREMENT OF RULE 2BA. THESE DECISIONS OF THE TRIBUNAL CITED BY THE LD. CO UNSEL FOR THE ASSESSEE DECIDING THE SIMILAR ISSUE RELATING TO EXEMPTION U/S.10(10C) IN FAVOUR OF THE ASSESSEE CLEARLY SHOWS THAT THE VIEW TAKEN BY THE AO WHILE ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S.10(10C) IN THE ASSESSMENTS FRAMED U/S.143(3) WAS A POSSIBLE VIEW AND THE LD. C IT, IN OUR OPINION, WAS NOT JUSTIFIED IN TREATING THE SAID ASSESSMENTS AS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE RELYING ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF SBI EXI T OPTEES (SUPRA) WHEREIN NO DECISION WAS RENDERED AS TO THE ADMISSIBILITY OF THE CLAIM OF TH E PETITIONERS ON MERIT AS AGREED BY THE LD. CIT HIMSELF IN HIS IMPUGNED ORDER PASSED U/S.263.WE, TH EREFORE, SET ASIDE THE IMPUGNED ORDERS PASSED U/S.263 AND RESTORE THE ORDERS PASSED BY THE AO U/S .143(3). CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE ABOVE REFERRED ORDERS THE HONBLE COURTS AND THE COORDINATING BENC H,WE ARE OF THE OPINION THAT THE ASSESSEE WAS ENTITLED TO GET BENEFIT OF THE EXEMPTION PROVIDED U /S.10(10C) OF THE ACT.THEREFORE,REVERSING THE ORDER OF THE FAA WE DECIDED EFFECTIVE GROUND OF APP EAL IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED /'0 &' 1 2 3 ( ' 45 . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH MARCH,2014 . . ( +,! 6 7 7 EKPZ EKPZ EKPZ EKPZ , 201 4 , ( - 8 SD/- SD/- ( LAT; LAT; LAT; LAT; -- -- -- --, / SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 7 /DATE: 07.03.2014. SK . . . . ( (( ( $': $': $': $': ; ; ; ;:!' :!':!' :!' / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '# 2. RESPONDENT / $%'# 3. THE CONCERNED CIT(A)/ < = , 4. THE CONCERNED CIT / < = 5. DR D BENCH, ITAT, MUMBAI / :>- $' MH MHMH MH , . . . 6. GUARD FILE/ - / %:' %:' %:' %:' $' $'$' $' //TRUE COPY// . / BY ORDER, ? / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI