Karan Pal Singh, Mohali V. ITO, W-6(2), Mohali

ITA 872/CHANDI/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2361 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Assessee Lawyers: B B SHARMA; AMOTOZ SINGH
• Keywords: Period of limitation; Capital receipt; Time period of passing order
• Section: 10

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , !' # $ % &' , '( BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 870/CHD/2018 / ASSESSMENT YEAR : 2014-15 SH. RAJESHWAR SHARMA, HOUSE NO.584, SECTRO 59, PHASE-4, MOHALI THE I.T.O., WARD 6(2), MOHALI ./PAN NO: AMDPS4641Q / APPELLANT /RESPONDENT APPEAL AGAINST THE ORDER OF CIT(A ) - 2 , CHANDIGARH DATED 28.3.2018 ./ ITA NO. 871/CHD/2018 / ASSESSMENT YEAR : 2014-15 SH. DHARAM SINGH RAWAT, HIG 235,SECTOR 71, MOHALI THE I.T.O., WARD 6(3), MOHALI ./PAN NO: ADLPR1020M / APPELLANT /RESPONDENT APPEAL AGAINST THE ORDER OF CIT(A ) - 2, CHANDIGARH DATED 27.3.2018 ./ ITA NO. 872/CHD/2018 / ASSESSMENT YEAR : 2014-15 SH. KARAN PAL SINGH, HOUSE NO.528, IST FLOOR, PHASE-I, MOHALI THE I.T.O., WARD 6(2), MOHALI ./PAN NO: ABXPS6381A / APPELLANT /RESPONDENT APPEAL AGAINST THE ORDER OF CIT(A ) - 2, CHANDIGARH DATED 28.3.2018 ! /ASSESSEE BY : S/SHRI B.B.SHARMA & AMOTOZ SINGH, CA ' ! / REVENUE BY : SMT. CHANDRAKANTA, SR. DR # $ % /DATE OF HEARING : 21.02.2019 &'() % / DATE OF PRONOUNCEMENT : 11.03.2019 ITA NOS. 870 TO 872/CHD/2018- SH. RAJESHWAR SHARMA & ORS, MOHALI 2 ') / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEALS HAS BEEN PREFERRED BY THE DIFFE RENT ASSESSEES AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)]. 2. SINCE COMMON ISSUE IS INVOLVED IN ALL THE APPE ALS, HENCE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY T HIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.870/CHD/2018 IN THE CASE OF RAJESHWAR SHARMA IS TAKEN AS LEAD CASE FOR NARRATION OF FACT S. ITA NO.870/CHD/2018 3. THE APPEAL IS BARRED BY A LIMITATION PERIOD OF 3 DAYS. CONSIDERING THE SHORTNESS OF THE DELAY PERIOD, THE DELAY IN FIL ING THE APPEAL IS HEREBY CONDONED. 4. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) CHANDIGARH HAS ERRED IN UPHOLDING THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER AND DISREGARDING THE PROVISIONS OF SUB-SECTION (II) OF SECTION 10(10A) IGNORING THE FACT THAT THE AMOUNT OF RS. 28,08,847/- RECEIVED BY THE ASSESSEE WAS COMMUTED PENSION ON ACCOUNT OF RETIREMENT BENEFIT. 2. THAT THE LD. CIT(A) IS WRONG IN UPHOLDING THE ADDITION AMOUNTING TO RS. 2,00,000/- IN RESPECT OF CASH DEPOSITS AS THE SAME AS WERE MADE OUT OF CASH WITHDRAWALS DONE BY THE ASSESSEE IN THE PREVIOUS YEARS. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT AS PER THE ITA NOS. 870 TO 872/CHD/2018- SH. RAJESHWAR SHARMA & ORS, MOHALI 3 INSTRUCTION OF THE CLIENT, HE DOES NOT PRESS GROUND NO.2 OF THE APPEAL. A SEPARATE NOTE THAT THIS GROUND IS NOT PRESSED IS A LSO MADE BY THE COUNSEL FOR THE ASSESSEE UNDER HIS SIGNATURES. IN VIEW OF THIS, GROUND NO.2 IS DISMISSED AS NOT PRESSED. 6. NOW COMING TO THE GROUND NO.1 OF THE APPEAL. THE BRIEF FACTS RELATING TO THE ISSUED ARE THAT DURING THE ASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIM ED EXEMPTION U/S 10 (10A) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE AC T') AMOUNTING TO RS. 14,00,236/- (50% OF 28,00,741/-), RECEIVED AS LUMP SUM PAYMENT FROM ITS ERSTWHILE EMPLOYER I.E. M/S RANBAXY LABORATORIES LT D ON ACCOUNT OF DISCONTINUANCE OF CERTAIN RETIREMENT POLICY OF COM PANY. THE AMOUNT WAS CLAIMED BY THE ASSESSEE TO BE AMOUNT RECEIVED ON AC COUNT OF RETIREMENT BENEFITS BY HIS EMPLOYER COMPANY M/S RANBAXY LABOR ITES LTD./, AS PER COMPANYS POLICY AND WAS THUS IN THE NATURE OF COMM UTED 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) REL ATES TO MEMBERS OF THE CIVIL SERVICES, DEFENCE OR TO THE MEMBERS OF ALL INDIA 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 PROVINCIAL ACT AND NOT THE E MPLOYEES OF THE PRIVATE COMPANIES. HOWEVER, THE ASSESSING OFFICER ALSO FUR THER EXAMINED THE CLAIM OF EXEMPTION AND FINALLY DISALLOWED THE SAME FOR DIFFERENT REASONS. 7. IN APPEAL, SO FAR AS THE OBSERVATION OF THE ASSE SSING OFFICER THAT THE BENEFIT OF SECTION 10(10-A) OF THE ACT WAS NOT AVAI LABLE TO THE ASSESSEE, THE LD. CIT(A) HELD THAT AS PER THE PROVISIONS OF S ECTION 10(10A)(II) OF THE ITA NOS. 870 TO 872/CHD/2018- SH. RAJESHWAR SHARMA & ORS, MOHALI 4 ACT, THE EXEMPTION WAS ALSO AVAILABLE TO THE PRIVAT E EMPLOYEES ALSO. HOWEVER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OBSERVING THAT THE AFORESAID PAYM ENT WAS MADE BY THE EMPLOYER OF THE ASSESSEE EMPLOYEES AS ONE TIME LUMP SUM PAYMENT ON ACCOUNT OF CLOSURE OF PENSION POLICY. THAT WHILE C ALCULATING THE AMOUNT PAYABLE TO EMPLOYEES ON RETRENCHMENT, VARIOUS FACT ORS WERE CONSIDERED INCLUDING THE SALARY, LENGTH OF SERVICE COMPLETED, NUMBER OF YEARS REMAINING TILL RETIREMENT ETC. OF THE EMPLOYEES. HE HELD THAT THE AMOUNT HAD NOT BEEN PAID UNDER THE SCHEME OF COMMUTATION O F PENSION RATHER THE SAME WAS PAID ON ACCOUNT OF RETRIAL POLICY BEING UN ILATERALLY WITHDRAWN BY THE EMPLOYER AND THAT THE AMOUNT IS NOT A COMMUTAT ION OF PENSION. HE ALSO OBSERVED THAT EVEN IN THE RETIREMENT POLICY, THERE WAS NO PROVISION REGARDING ANY COMMUTATION OF PENSION. HE, THEREFORE , HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION AS ENUMERAT ED IN SECTION 10(10A) OF THE ACT AND DENIED THE EXEMPTION CLAIMED BY THE ASSESSEE ON THIS ACCOUNT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO GONE THROUGH THE RECORD. THOUGH IN STRICT TERMS, IT MAY NOT BE S AID THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS ON ACCOUNT OF COMMUTAT ION OF PENSION, HOWEVER, THE FACT ON THE FILE IS THAT THE AFORESA ID AMOUNT WAS GIVEN BY THE NEW EMPLOYER WHO HAS TAKEN OVER THE COMPANY FROM T HE EARLIER EMPLOYER AND HE HAD TERMINATED THE SERVICES OF THE EMPLOYEE S ON ACCOUNT OF JOB RETRENCHMENT. THE AMOUNT WAS PAID AS A COMPENSATION FOR RETRENCHMENT OF SERVICES TAKING INTO CONSIDERATION THE LENGTH OF SE RVICE, BASIC SALARY, THE AGE AND OTHER FACTORS. IN OUR VIEW, THE SAID AMOUN T IS A COMPENSATION PAID BY THE EMPLOYER WHILE TERMINATING THE SERVICES OF T HE EMPLOYEE ON ACCOUNT ITA NOS. 870 TO 872/CHD/2018- SH. RAJESHWAR SHARMA & ORS, MOHALI 5 LOSS OF JOB AND FURTHER SUBSISTENCE, THUS, THE SAID AMOUNT WAS JUST A CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE. IN FACT, NO P ART OF AMOUNT RECEIVED BY THE ASSESSEE IS TAXABLE. WE, THEREFORE, ALLOW THE A PPEAL OF THE ASSESSEE AND DELETE THE DISALLOWANCE AND CONSEQUENT ADDITIONS MA DE BY THE ASSESSING OFFICER IN THIS RESPECT. WE FURTHER HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM REFUND / ADJUSTMENT OF THE TAX PAID IN RESPEC T OF THE AFORESAID COMPENSATION RECEIVED, IF SO, CLAIMED BY THE ASSESS EE. IN THE ABOVE TERMS, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. ITA NO. 871 & 872/CHD/2018 9. SINCE THE FACTS AND ISSUE INVOLVED IN ALL THE AP PEALS ARE IDENTICAL, THE ISSUE IS THESE APPEALS IS DECIDED ACCORDINGLY. 10. IN VIEW OF THIS, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT IN ITA NO. 870/CHD/2018 STANDS PARTLY ALLOWED, WHEREAS, APPEA LS OF THE ASSESSEES IN ITA NOS. 871 & 871/CHD/2018 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.03.2019 SD/- SD/- ( # $ % &' / ANNAPURNA GUPTA) '( / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 11.03.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR ITA NOS. 870 TO 872/CHD/2018- SH. RAJESHWAR SHARMA & ORS, MOHALI 6