ITO, Chandigarh V. Inderjit Singh Bedi, Chandigarh

ITA 707/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68507 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Benefit of exemption
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 707/CHD/2013 ASSESSMENT YEAR:2008-09 THE INCOME TAX OFFICER, VS SHRI INDERJIT SINGH BED I, WARD 4(4), HOUSE NO. 3840, CHANDIGARH. SECTOR 32-D, CHANDIGARH. PAN NO AAUPB-8652P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI J.S.NAGAR RESPONDENT BY : NONE DATE OF HEARING : 05.09.2013 DATE OF PRONOUNCEMENT : 23.09.2013 O R D E R PER SUSHMA CHOWLA, J.M. THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(APPEALS), CHANDIGARH DATED 25.03.2013 RELATING TO ASSESSMENT YEAR 2008-09 AGAINST THE ORDER PASSED UNDER SECTION 144 OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. C1T(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C1T(A) HAS FAILED TO APPRECIATE THE FACT THAT THE E MPLOYEE OPTED FOR EXIT OPTION SCHEME DECLARED BY STATE BANK OF INDIA WHICH IS NOT ELIGIBLE FOR EXEMPTION U/S 10(10C) AS POINTED OUT BY THE CBDT UN DER F.N0.200/34/2009/ITA.1 DATED 06.10.2009. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. C1T(A) WAS NOT JUSTIFIED IN ALLOWING ASSESSEE'S CLA IM OF EXEMPTION U/S 10(1 OG) AS THERE IS NO FULFILLMENT OF LEGAL REQUIR EMENT LAID DOWN UNDER RULE-2BA OF THE INCOME-TAX RULES, 1962. 2 4. THE APPELLANT PRAYS THAT MONETARY LIMIT UNDER INSTR UCTION NO.3 OF 2011 MAY NOT BE APPLIED TO THE PRESENT CASE AS T HE EXEMPTION CLAIMED U/S 10(10C) BY THE ASSESSEE IS NOT ALLOWABLE IN L IGHT OF SPECIFIC INSTRUCTION IN THIS REGA RD BY THE CBDT UNDER F.NO.200/34/2009/LTA.I DATED 06.10.2009 AND INSTRUCTION NO.3 OF 2011 DATED 09.02.2011 PROVIDE S EXCLUSION UNDER PARA-8(B) WHERE CBDT'S ORDER, NOTIFICATION, INSTRU CTION OR CIRCULAR IS SUBJECT MATTER OF ADVERSE ORDER. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OFF. 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAIN ST THE ORDER OF CIT(APPEALS) IN ALLOWING THE EXEMPTION UNDER SECTIO N 10(10C) OF THE ACT. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD TAKEN VOLUNTA RY RETIREMENT FROM THE STATE BANK OF INDIA UNDER THE EXIT OPTION SCHEM E. THE ASSESSEE HAD RECEIVED GROSS SALARY OF RS. 915,386/- AND HAD CLAIMED THE EXEMPTION UNDER SECTION 10(10C) OF THE ACT OF RS. 5 ,00,000/-. THE ASSESSING OFFICER DENIED THE SAID EXEMPTION UNDER S ECTION 10(10C) OF THE ACT IN VIEW OF THE EMPLOYER NOT GIVEN THE SA ID BENEFIT TO THE ASSESSEE. 5. THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESS EE IN VIEW OF THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF TRIB UNAL IN SHRI BIKRAM JIT PASSI IN ITA NO. 925/CHD/2011 VIDE ORDER DATED 09.11.2011. 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT(APPEALS). DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE AND WE PROCEED TO DECIDE THE PRESENT APPEAL AS THE ISSUE STANDS COVERED BY THE EARLIER ORDER OF THE TRIBUNAL. 7. ON THE PERUSAL OF THE RECORD, WE FIND THAT THE O NLY ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE EXEMPTI ON CLAIMED UNDER 3 SECTION 10(10C) OF THE ACT AT RS. 5,00,000/-. THE ASSESSEE ON VOLUNTARY RETIREMENT FROM STATE BANK OF INDIA UNDER THE EXIT OPTION SCHEME HAD RECEIVED GROSS SALARY OF RS. 915,386/- W HICH INCLUDED THE EX-GRATIA PAYMENT. THE ASSESSEE CLAIMED EXEMPT ION UNDER SECTION 10(10C) OF THE ACT AT RS. 5,00,000/-. WE F IND THAT IDENTICAL ISSUE AROSE BEFORE THE TRIBUNAL IN THE CASE OF SHRI BIKRAM JIT PASSI (SUPR A) AND THE TRIBUNAL VIDE ORDER DATED 09.11.2011 HELD AS UNDER : 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED AND CONSIDERED THE FACTS OF THE APPEAL. THE LD. 'A R' PLACED RELIANCE, ON THE DECISION, IN THE CASE OF PANDYA VI NOD CHANDRA BHOGILAE V ITO (2010) 045 DTR 105 ITAT, AHMEDABAD, TO STATE THAT THE FACT-SITUATION OF THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION. HAVING CONSIDERED THE DEC ISION, WE FOUND THAT THE SAME IS APPLICABLE TO THE FACTS OF T HE PRESENT CASES. THE RELEVANT AND OPERATIVE PART OF THE DECI SION IS REPRODUCED HEREUNDER : 2. THUS THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ABOUT ALLOWABILITY OF EXEMPTION UNDER SECTION 10(10 C) OF THE INCOME TAX ACT, 1961. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A DEPUTY 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 PENSION AMOUNTING TO RS.3,81,894 (INCLUDING EXGRATI A). ON EXAMINATION OF FORM NO.16 THE ASSESSING OFFICER NOTICED THAT ASSESSEE RECEIVED EXGRATIA OF RS.3,07, 236 ON VRS. HE CLAIMED EXEMPTION UNDER SECTION 10(10C) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE C LAIM BY FOLLOWING CIRCULAR NO. CHIEF CIT, BARODA LETTER BRD/CHIEF CIT/TECH/MICS/10(10C)/2009-10, DATED 17- 6-2006. THE ASSESSEE RELIED ON THE DECISION OF TRIBUNAL, KOLKATA IN THE CASE OF DY.CIT V. KRISHNA GOPAL SAHA (2009) 29 DTR (KOL)(TM)(TRIB) 385 BUT TH E LEARNED ASSESSING OFFICER DID NOT AGREE AND MADE TH E ADDITION. THE LEARNED COMMISSIONER (APPEALS) ALSO CONFIRMED THE DISALLOWANCE 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 MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE DISTINCTION CITED BY THE LEARNED COMMISSIONER (APPEALS) IS NOT SOUND AND DOES NOT STAND TO REASON. THE ONLY BASIS FOR N OT ALLOWING THE CLAIM HAS BEEN THAT SCHEME FOR VRS IS NOT IN ACCORDANCE WITH RULE 2BA. HOWEVER,, IT HAS NOT BEEN POINTED OUT HOW THE EMPLOYER HAS NOT FRAMED TH E SCHEME IN ACCORDANCE WITH RULE 2BA. EARLIER TILL 2 002 SCHEMES WERE REQUIRED TO BE APPROVED BY THE CHIEF 4 COMMISSIONER BUT THEREAFTER SUCH REQUIREMENT HAS BE EN DISPENSED WITH AND, THEREFORE, IT IS ONLY FOR THE EMPLOYER TO FRAME THE SCHEME FOR VRS OR FOR EARLIER EXIT OPTION. IF ASSESSING OFFICER HAD ANY DOUBT AB OUT THE SCHEME HE COULD HAVE ENQUIRED FROM THE EMPLOYER . SO FAR AS THE ASSESSEE EMPLOYEE IS CONCERNED, HE CANNOT BE PENALIZED AND TAX WILL BE LEVIED ON HIM O N THE ASSUMPTION THAT THE SCHEME FRAMED BY EMPLOYER I S NOT IN ACCORDANCE WITH RULE 2BA. IN ANY CASE, THE JUDGMENT OF THIRD MEMBER IN DY.CIT V. KRISHNA GOPAL SAHA (SUPRA) IS CLEARLY APPLICABLE AND WE DO NOT FI ND ANY REASON TO TAKE A DIFFERENT VIEW. FOR THE SAKE OF CONVENIENCE WE REFER TO FOLLOWING PARA FROM THE THI RD 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, THEREFO RE, HEARD THE LEARNED DEPARTMENT REPRESENTATIVE AND PERUSED THE MATERIAL PLACED BEFORE ME. I FIND THAT THE ISSUE HAS BEEN CONSIDERED BY THE HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF SAIL DSP VR EMPLOYEES ASSOCIATION 1998 V. UNION OF INDIA (SUPRA) IN WHICH THEIR LORDSHIPS HELD AS UNDER : SECTION 10(10C) OF THE INCOME TAX ACT, 1961, USES THE EXPRESSION ANY AMOUNT RECEIVED BY AN EMPLOYEE. AT THE TIME OF HIS VOLUNTARY RETIREMENT IN ACCORDAN CE WITH ANY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT . IF A PLAIN LITERAL INTERPRETATION OF STATUTORY PROV ISION PRODUCED A MANIFESTLY ABSURD AND UNJUST RESULT, WHI CH THE LEGISLATURE COULD NOT HAVE INTENDED, THE COURT IS SUPPOSED TO MODIFY THE LANGUAGE USED BY THE LEGISLATURE EVEN TO DO SOME VIOLENCE TO IT SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AN D PRODUCE A RATIONAL CONSTRUCTION. AN EXPRESSION USE D IN THE STATUTE IS NOT ALWAYS TO BE INTERPRETED LITERAL LY OR GRAMMATICALLY. SOMETIMES IT HAS TO BE INTERPRETED HAVING REGARD TO THE CONTEXT IN WHICH THE EXPRESSIO N IS USED AND HAVING REGARD TO THE OBJECT AND PURPOSE FO R WHICH THE SAME IS ENACTED. SEC.10(10C) WAS INSERTE D IN ORDER TO MAKE VOLUNTARY RETIREMENT ATTRACTIVE SO AS TO REDUCE HUMAN COMPLEMENTS FOR SECURING ECONOMIC VIABILITY OF CERTAIN COMPANIES. THIS OBJECT WAS ELABORATED BY VARIOUS DEPARTMENTAL CIRCULARS AND EXPLANATORY STATEMENTS ISSUED FROM TIME TO TIME. SIMILARLY, RULE 2BA OF THE INCOME TAX RULES, 1962, WHICH WAS INSERTED BY IT (SIXTEENTH AMENDMENT) RULE S, 1962, WAS AMENDED FROM TIME TO TIME. ALL THESE GO TO SHOW THAT THIS WAS INTENDED TO MAKE VOLUNTARY RETIREMENT MORE ATTRACTIVE AND BENEFICIAL TO THE EMPLOYEE OPTING FOR VOLUNTARY RETIREMENT. THEREFOR E, THIS HAS TO BE INTERPRETED IN A MANNER BENEFICIAL T O THE OPTEE FOR VOLUNTARY RETIREMENT, IF THERE IS ANY AMBIGUITY. SUMS PAID ON VOLUNTARY RETIREMENT TO THE EXTENT OF RUPEES FIVE LAKHS ARE EXEMPTED FROM BEING CHARGED T O 5 TAX BY REASON OF SECTION 10(10C). EVEN IF THE PAYM ENT IS STRETCHED OVER A PERIOD OF YEARS, THE SAME WOULD NOT 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 , WHO TAKES VOLUNTARY RETIREMENT, IS ENTITLED TO DEDU CTION UNDER SECTION 10(10C) EVEN IF THE PAYMENT IS STRETC HED OVER A PERIOD OF YEARS. THEY HAVE ALSO HELD THAT PROVISION OF SECTION 10(10C) SHOULD BE INTERPRETED IN A MANNER BENEFICIAL TO THE OPTEE FOR VOLUNTARY RETIRE MENT. IT MAY BE POINTED OUT THAT IN THE ABOVE-MENTIONED C ASE, THE EMPLOYER I.E. SAIL WAS OF THE OPINION THAT THE EMPLOYEES WERE NOT ENTITLED TO EXEMPTION UNDER SECT ION 10(10C) AND ACCORDINGLY, SAIL HAD BEEN DEDUCTING TA X AT SOURCE ON THE AMOUNT PAID UNDER THEIR VOLUNTARY RETIREMENT SCHEME. THE FACTS ARE SIMILAR IN THE ASSESSES CASE, BECAUSE IN THE CASE OF THE ASSESSEE ALSO, THE EMPLOYER BELIEVING THAT THE ASSESSEE IS NOT ENT ITLED TO DEDUCTION UNDER SECTION 10(10C) HAS DEDUCTED TAX AT SOURCE ON THE AMOUNT PAID ON VOLUNTARY RETIREMENT. 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 CASE OF CIT V. NAGESH DEVIDAS KULKARNI (SUPRA) HELD AS UNDER : THE ASSESSEE IS ENTITLED TO THE EXEMPTION UNDER SECTION 10(10C) OF THE ACT AND ALSO REBATE UNDER SECTION 89 OF THE ACT IN RESPECT OF THE AMOUNT RECE IVED IN EXCESS OF RS.5,00,000 ON ACCOUNT OF VOLUNTARY RETIREMENT. THUS THEIR LORDSHIPS HAVE HELD THAT THE ASSESSEE, WHO OPTS FOR VOLUNTARY RETIREMENT, IS NOT ONLY ENTI TLED TO EXEMPTION UNDER SECTION 10(10C) BUT ALSO REBATE UNDER SECTION 89 OF THE INCOME TAX ACT. SIMILAR VI EW IS TAKEN BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. P. SURENDRA PRABHU (SUPRA) WHEREIN THEIR LORDSHIPS HELD 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 AB OVE THE PRESCRIBED LIMIT; UNDER THE AFORESAID PROVISION , THE ASSESSEE WAS ALSO ENTITLED TO RELIEF UNDER SECTION 89(1) OF THE ACT READ WITH RULE 21A. 6. FROM THE ABOVE IT IS EVIDENT THAT WHILE THE L EARNED AM RELIED UPON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. M.CHELLADURAI & ORS. (2 009) 317 ITR 370(MAD) : (2009) 176 TAXMAN 31, HE HAS NOT TAKEN INTO ACCOUNT THE DECISIONS OF OTHER HIGH COUR TS INCLUDING THE JURISDICTIONAL HIGH COURT. THE HON'B LE 6 JURISDICTIONAL HIGH COURT UNDER THE IDENTICAL FACTS HELD THE ASSESSEE, I.E., THE RETIRED EMPLOYEE, TO BE ENT ITLED TO DEDUCTION UNDER SECTION 10(10C). SIMILAR VIEW IS T AKEN BY HON'BLE BOMBAY AS WELL AS KARNATAKA HIGH COURTS. THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I S BINDING UPON US AND MOREOVER IF TWO VIEWS ARE POSSI BLE, WHILE INTERPRETING THE PROVISION, A VIEW WHICH IS FAVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED. HON 'BLE JURISDICTIONAL HIGH COURT IN THE ABOVE-REFERRED CAS E OF SAIL DSP VR EMPLOYEES ASSOCIATION 1998 V. UNION OF INDIA (SUPRA) HAS ALSO HELD THAT THE PROVISIONS 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 H ON'BLE JURISDICTIONAL HIGH COURT, BOMBAY HIGH COURT AND KARNATAKA HIGH COURT AGREE WITH THE LEARNED JM AND HOLD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UND ER SECTION 10(10C) TO THE EXTENT OF RS.5 LAKHS. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, 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 BANK OF INDIA. RESPE CTFULLY FOLLOWING THE SAID DECISION, THE APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. 8. THE FACTS OF THE PRESENT CASE BEING IDENTICAL TO THE FACTS BEFORE THE TRIBUNAL IN THE CASE OF SHRI BIKRAM JIT PASSI ( SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE UPHOLD T HE ORDER OF CIT(APPEALS) AND DISMISS THE GROUND OF APPEAL RAISE D BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF SEPTEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 23 RD SEPTEMBER,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH