Sh. Sarabjit Singh, Mohali V. ITO, W-6(2), Mohali

ITA 764/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6689 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 24-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: ADITI; PARIKSHIT AGGRAWAL
• Keywords: Capital receipt; Benefit of exemption

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , . ... , %& BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ./ ITA NO.764/CHD/2018 / ASSESSMENT YEAR : 2014-15 SH.SARABJIT SINGH, H.NO. 712, PHASE VI, MOHALI. THE INCOME TAX OFFICER, WARD 6(2), MOHALI. ./ PAN NO.ABPPS4515A / APPELLANT / RESPONDENT /ASSESSEE BY : SMT.ADITI, CA & SHRI PARIKSHIT AGGRAWAL, ! / REVENUE BY : SHRI MANJIT SINGH, CIT DR. ' # $ /DATE OF HEARING : 29.04.2019 $ /DATE OF PRONOUNCEMENT: 06.04.2019 /ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 2, CHANDIGARH (IN SHORT CIT(A) DATED 28.3.2018. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL: ITA NO.764/CHD/2018 A.Y.2014-15 2 1. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AN D IN LAW, THE WORTHY CIT(A) THROUGH HIS ORDER DATED 28.03.201 8 HAS ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF S. 250(6) OF THE INCOME TAX ACT, 1961, 2. THAT ON FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN HOLDING THE RECEIPT OF RS.56,38,227/- FROM THE P REVIOUS EMPLOYER AS TAXABLE EVEN WHEN THE SAME WAS CAPITAL RECEIPT AND NOT TAXABLE. 3. THAT ON FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREBY HE DENIED THE BENEFIT OF EXEMPTION OF RS. 56,38,227/- CLAIMED BY THE APPELLANT U/S 10(10A) AS COMMUTATION OF PENSION UNDER THE RETIRAL POLICY OF THE COMPANY. 4. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION , DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON O R BEFORE THE DISPOSAL OF THE SAME. 3. THE FACTS RELEVANT TO THE ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTED THAT THE ASSE SSEE HAD CLAIMED EXEMPTION U/S 10(10A) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT) AMOUNTING TO RS.56,38,227/- RECEIV ED AS LUMP SUM PAYMENT FROM ITS ERSTWHILE EMPLOYER I.E.. M/S R ANBAXY LABORATORIES LTD ON ACCOUNT OF DISCONTINUANCE OF CE RTAIN RETIREMENT POLICY OF COMPANY. THE AMOUNT WAS CLAIME D BY THE ASSESSEE TO BE AMOUNT RECEIVED ON ACCOUNT OF RETIRE MENT BENEFITS FROM HIS EMPLOYER COMPANY M/S RANBAXY LABO RITES LTD., AS PER COMPANY'S REFRESHMENT POLICY AND WAS T HUS IN THE NATURE OF COMMUTED PENSION AND, THEREFORE, ELIGIBLE FOR EXEMPTION U/S 10(10A) OF THE ACT. IN PARA 6.1, THE ASSESSING OFFICER OBSERVED THAT SECTION 10(10A) RELATES TO ME MBERS OF THE ITA NO.764/CHD/2018 A.Y.2014-15 3 CIVIL SERVICES, DEFENCE OR TO THE MEMBERS OF ALL IN DIA SERVICE OR TO THE MEMBERS OF THE CIVIL SERVICES OF A STATE OR HOLDER OF CIVIL POSTS UNDER A STATE OR TO THE EMPLOYEES OF A LOCAL AUTHORITY OR A CORPORATION ESTABLISHED BY A CENTRAL, STATE OR PROV INCIAL ACT AND NOT THE EMPLOYEES OF THE PRIVATE COMPANIES. HOW EVER, THE ASSESSING OFFICER ALSO FURTHER EXAMINED THE CLAIM O F EXEMPTION AND FINALLY DISALLOWED THE SAME FOR DIFFERENT REASO NS. 4. IN APPEAL, SO FAR AS THE OBSERVATION OF THE ASSE SSING OFFICER THAT THE BENEFIT OF SECTION 10(10A) OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE, THE LD. C1T(A) HELD THAT AS PER THE PROVISIONS OF SECTION 10(10A)(II) OF THE ACT, THE E XEMPTION WAS ALSO AVAILABLE TO THE PRIVATE EMPLOYEES ALSO. HOWEV ER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSES SING OFFICER OBSERVING THAT THE AFORESAID PAYMENT WAS MA DE BY THE EMPLOYER OF THE ASSESSEE EMPLOYEES AS ONE TIME LUMP SUM PAYMENT ON ACCOUNT OF CLOSURE OF PENSION POLICY. TH AT WHILE CALCULATING THE AMOUNT PAYABLE TO EMPLOYEES ON RETR ENCHMENT, VARIOUS FACTORS WERE CONSIDERED INCLUDING THE SALAR Y, LENGTH OF SERVICE COMPLETED, NUMBER OF YEARS REMAINING TILL R ETIREMENT ETC. OF THE EMPLOYEES. HE HELD THAT THE AMOUNT HAD NOT BEEN PAID UNDER THE SCHEME OF COMMUTATION OF PENSION RAT HER THE SAME WAS PAID ON ACCOUNT OF RETRIAL POLICY BEING UN ILATERALLY WITHDRAWN BY THE EMPLOYER AND THAT THE AMOUNT IS NO T A ITA NO.764/CHD/2018 A.Y.2014-15 4 COMMUTATION OF PENSION. HE ALSO OBSERVED THAT EVEN IN THE RETIREMENT POLICY, THERE WAS NO PROVISION REGARDING ANY COMMUTATION OF PENSION. HE, THEREFORE, HELD THAT TH E ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION AS ENUMERATED IN SEC TION 10(10A) OF THE ACT AND DENIED THE EXEMPTION CLAIMED BY THE ASSESSEE ON THIS ACCOUNT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO GONE THROUGH THE RECORD. THE ISSUE IS SQUARELY COVE RED BY THE DECISION OF THE CO-ORDINATE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF OTHER EMPLOYEES IN SIMILAR FACTS AND CIRCUMSTANCES VIDE ORDER DATED 11.3.2019 PASSED IN ITA NO.870/CHD/2018 & OTHERS TITLED AS SH.RAJESHWAR SH ARMA & OTHERS VS. ITO. THIS TRIBUNAL OBSERVED AS UNDER: THOUGH IN STRICT TERMS, IT MAY NOT BE SAID THAT TH E AMOUNT RECEIVED BY THE ASSESSEE WAS ON ACCOUNT OF COMMUTATION OF PE NSION, HOWEVER, THE FACT ON THE FILE IS THAT THE AFORESAID AMOUNT WAS GIVEN BY THE NEW EMPLOYER WHO HAS TAKEN OVER THE COMPANY FROM THE EARLIER EMPLOYER AND HE HAD TERMINATED THE SERVICES OF THE EMPLOYEES ON ACCOUNT OF JOB RETRENCHMENT. THE AMOUN T WAS PAID AS A COMPENSATION FOR RETRENCHMENT OF SERVICES TAKING INTO CONSIDERATION THE LENGTH OF SERVICE, BASIC SALARY, THE AGE AND OTHER FACTORS. IN OUR VIEW, THE SAID AMOUNT IS A COMPENSA TION PAID BY THE EMPLOYER WHILE TERMINATING THE SERVICES OF THE EMPL OYEE ON ACCOUNT OF LOSS OF JOB AND FURTHER SUBSISTENCE, THU S, THE SAID AMOUNT WAS JUST A CAPITAL RECEIPT IN THE HANDS OF T HE ASSESSEE. IN FACT, NO PART OF AMOUNT RECEIVED BY THE ASSESSEE IS TAXABLE. WE, THEREFORE, ALLOW THE APPEAL OF THE ASSESSEE AND DEL ETE THE DISALLOWANCE AND CONSEQUENT ADDITIONS MADE BY THE A SSESSING OFFICER IN THIS RESPECT. WE FURTHER HOLD THAT THE A SSESSEE IS ENTITLED TO CLAIM REFUND / ADJUSTMENT OF THE TAX PAID IN RES PECT OF THE AFORESAID COMPENSATION RECEIVED, IF SO, CLAIMED BY THE ASSESSEE. ITA NO.764/CHD/2018 A.Y.2014-15 5 FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN TH E IDENTICAL FACTS AND CIRCUMSTANCES, THIS APPEAL OF T HE APPELLANT STANDS ALLOWED WITH IDENTICAL DIRECTIONS. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.05.2019. SD/- SD/- . ... (DR.B.R.R.KUMAR) (SANJAY GARG ) & /ACCOUNTANT MEMBER / JUDICIAL MEMBER () /DATED: APRIL, 2019 * * ) *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $ 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /3 5# / GUARD FILE ) ' / BY ORDER, ! / ASSISTANT REGISTRAR