Sh. Om Parkash, Panchkula V. ITO, Ward-5, Panchkula

ITA 717/CHANDI/2022

AI Insights

The case revolves around the entitlement of the assessee, Shri Om Parkash, to an exemption on the entire amount of gratuity received upon retirement from his service with the Haryana State Electricity Board, which was later transferred to Haryana Vidhyut Prasaran Nigam Ltd. (HVPNL). The primary legal issue was whether the exemption under section 10(10)(i) of the Income Tax Act, 1961, applicable to state government employees, or the limited exemption under section 10(10)(iii), which caps the exemption at Rs. 10 lakhs, should apply. The Tribunal referenced a previous decision by the Co-ordinate 'SMC' Delhi Bench, which supported the assessee's position that he was entitled to the broader exemption as a state government employee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127541 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 31-05-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 08-12-2022
• Other Referred Cases: Shri Jagdeep Singh Vs ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “एकल” च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “SMC” CHANDIGARH ी संजय गग , या यक सद य BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 717/CHD/2022 नधा रण वष / Assessment Year : 2018-19 Shri Om Parkash, House No. 2668, Sector 21, Panchkula. बनाम The ITO, Ward-5, Panchkula. थायी लेखा सं./PAN NO: AALPP5680J अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Amitoz Singh Kamboj,CA राज व क! ओर से/ Revenue by : Shri Akashdeep, Sr.DR स ु नवाई क! तार&ख/Date of Hearing : 01.06.2023 उदघोषणा क! तार&ख/Date of Pronouncement : 02.06.2023 आदेश/ORDER The present appeal has been preferred by the assessee against the order dated 13.10.2022 of the Commissioner of Income Tax (Appeals) NFAC, Delhi [in short ‘CIT(A)’] pertaining to assessment year 2018-19. 2. The sole issue raised by the assessee in this appeal is as to whether the assessee is entitled to exemption u/s 10(10)(i) of the Income Tax Act, 1961 (in short ‘the Act’) in respect of the entire amount of Gratuity received from the employer being a State Government employee or the said exemption is to be limited to Rs.10 lacs as provided u/s 10(10)(iii) of the Act. The ld. Counsel for the assessee has submitted that the assessee was an ITA-717/CHD/2022 A.Y. 2018-19 Page 2 of 4 employee of Haryana State Electricity Board. However, later on, the said Board was bifurcated into four units including Haryana Vidhyut Prasaran Nigam Ltd. (HVPNL) and the assessee was transferred to said HVPNL. The assessee retired in the year 2017-18 and received retirement benefits including gratuity and leave encashment. 3. At the outset, the ld. Counsel for the assessee has submitted that the issue is squarely covered by the decision of the Co-ordinate ‘SMC’ Delhi Bench of the Tribunal vide common order dated 27.05.2016 passed in bunch of appeals of similarly stated employees with the lead case titled as ‘Shri Jagdeep Singh Vs ITO’, ITA No. 1576/Del/2016. The relevant part of the order of the Co-ordinate Bench of the Tribunal is reproduced as under : 9. I have considered the submissions of both the parties and carefully gone through the material available on the record, to resolve the present controversy it is relevant to discuss the provisions contained in Section 10(10)(i), (ii) & (iii) of the Act which read as under: "(10) (i) any death- 'cum- retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972 , or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence services; (ii) any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972 ), to the extent it does not exceed an amount calculated in accordance with the provisions of sub- sections (2) and (3) of section 43 of that Act; (iii) any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependents on his death, to the extent it does not, in either case, exceed one- half month's salary for ITA-717/CHD/2022 A.Y. 2018-19 Page 3 of 4 each year of completed service, calculated on the basis of the average salary for the ten months immediately preceding the month in which any such event occurs, subject to such limit as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government]: Provided that where any gratuities referred to in this clause are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income- tax under this clause shall not exceed the limit so specified]: Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income- tax under this clause shall not exceed the limit so specified] as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years. " 10. In the present case, it is not in dispute that the assessee claimed the exemption u/s 10(10)(i) of the Act while the AO allowed the exemption u/s 10(10)(iii) of the Act. In the instant case, it is an admitted fact that the assessee was earlier employee of the Haryana State Government and working in Haryana State Electricity Board which later on was bifurcated into 4 utilities one of which was Dakshin Haryana Bijli Vitran Nigam Ltd. and the assessee was employee of the said corporation, which adopted the Haryana Civil Service (Revised Pension), Part-1 rules issued by the Haryana Government. The Haryana Government Power Department in its notification dated 14.08.\99& provided the conditions at the time of transfer of personnel in Clause 11 which read as under: "The terms and conditions of the services applicable to them on the effective date, the pay, pattern of Dearness Allowances, Additional Dearness Allowances, Interim Relief City Compensatory Allowances, House Rent allowances, Shift Duty allowances, Hardship allowances, medical facility, medical allowances, all other allowances on the projects, field and head office, leave of all kinds (including casual leave), Pension and Death-cum-retirement benefit, gratuity and leave encashment of every nature shall not be in any way be less favourable to them than those applicable to them immediately before such date. " 11. From the above notification, it is clear that the employees who were transferred in the Power Department like the assessee were eligible for all the benefits which were available before their transfer i.e. when they were the employee of the State Government. As per the provisions contained in Section 10( 10)(i) of the Act, the exemption was available for death-cum-retirement gratuity to the employees of the State Government, therefore, the assessee was eligible for exemption u/s 10(10)(i) of the Act and not u/s 10(10)(iii) of the Act as has been held by the AO. It is also noticed that the department itself has allowed the exemption to another employees also on the basis of the notification issued on 01.07.1999 by the Government of Haryana in which it has been declared that the Dakshin Haryana Bijli Vitran Nigam Ltd. is a Government Company and there is no existence of public fund and the employees of the wrest while HSEB were very much covered under GPF scheme which applies only to the Government employees. Moreover, the DHBVN also adopted the Haryana Civil Service (Revised Pension), Part-1, Rules, 2009 which shall apply to all pensioners entitled as on 01.01.2006 under PCS Rules, 1953. One of such order dated IS.05.2012 u/s 147/143(3) of the Act for the assessment year 2010-11 in the case of Sh. Jai Dayal Singh Bamel, 488, Sector-7, Faridabad was furnished by the Id. ITA-717/CHD/2022 A.Y. 2018-19 Page 4 of 4 Counsel of the assessee which is placed on record. Therefore, when the department itself had allowed the exemption on account of gratuity to the employees of the same category to which the assessee belongs then there was no reason to deny the benefit to the assessee, in view of the principle of the consistency. I, therefore, considering the totality of the facts delete the addition made by the AO and sustained by the Id. CIT(A).” 4. The ld. DR did not produce any contrary decision to the effect. In view of this, it is held that the assessee is entitled to the exemption u/s 10(10)(i) of the Income Tax Act and respectfully following the aforesaid decision of the Co-ordinate Bench, the impugned addition made by the AO is ordered to be deleted. 5. In the result, the appeal of the assessee is allowed. Order pronounced on 02 nd June, 2023. Sd/- ( संजय गग ) (SANJAY GARG ) या यक सद य/ Judicial Member “Poonam” आदेश क! त,ल-प अ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3.आयकर आय ु /त/ CIT 4. -वभागीय त न2ध, आयकर अपील&य आ2धकरण , च4डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar