Naresh kashyap, Ambala Cantt. V. DCIT, Ambala

ITA 921/CHANDI/2011

• Counselvise Citation: 92121514 RSA 2011
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 19-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: SANDEEP PARKASH SHARMA
• Keywords: Benefit of exemption

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 921/CHD/2011 A.Y.: 2008-09 SHRI NARESH KASHYAP, V DCIT, 74, MAHESH NAGAR, AMBALA CANTT. AMBALA CANTT. PAN: ABDPK-5327J & ITA NO. 922/CHD/2011 A.Y.: 2008-09 SHRIJAGDISH CHAND CHAUDHRY, V DCIT, 309, HBC, BALDEV NAGAR AMBALA CANTT. AMBALA CANTT. PAN: AAVPC-0031E (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI SANDEEP PARKASH SHARMA DEPARTMENT BY: SMT. JAI SHREE SHARMA DATE OF HEARING : 31.10.2011 DATE OF PRONOUNCEMENT : 09.11.2011 ORDER PER MEHAR SINGH, AM BOTH THE PRESENT APPEALS FILED DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE ORDER, DATED 14.07.2011 OF THE LD. CIT(A) PANCHKULA PASSED U/S 250(6) OF THE INCOME-TA X ACT,1961 (IN SHORT HEREINAFTER REFERRED TO AS 'THE ACT') 2. THE GROUNDS OF APPEAL ARE ALSO SIMILAR IN BOTH T HESE APPEALS, WHICH ARE LISTED AS UNDER : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ILLE GAL 2 AND ARBITRARY ORDER OF THE AO WHO HAS PASSED A VIRTUAL EX-PARTE ORDER BASED ON A LETTER FROM AN OFFICIAL OF CBDT WITHOUT EXAMINING THE MATTER OF EX IT OPTION SCHEME FOR APPLICATION OF SECTION 10(10C) OF THE IT ACT. 2. THAT THE SAID CIT(A) HAS BEEN TWICE ARBITRARY BY NOT DEALING WITH THE GROUNDS OF APPEAL AND BY MAKING OUT A FRESH CASE ON FLIMSY AND EXTRANEOUS FACTS AND OBSERVATIONS. 3. THAT THE CLAIM OF THE APPELLANT WAS LEGAL AS THE EXIST SCHEME WAS IN CONFORMITY WITH SECTION 10(10C) OF THE IT ACT AND RULE 2BA OF THE IT RULES. THE TRIBUNALS & HIGH COURT ALLOWED THE CLAIMS OF EXEMPTION OF RS.5,00,000.00 REJECTING THE PLEA OF THE CIT BASING HIS ORDER. 4. THAT THE TWIN PROVISIONS IN THE SCHEME VIZ TDS AND DISCRETION TO FILL VACANCIES WERE BY WAY OF PRECAUTION AND NOWHERE HIT THE PROVISIONS OF SECTION 10(10C) AND RULE 2BA OF THE IT ACT AND RULES. IT IS STATED THAT BOTH THE IMPUGNED ORDERS ARE ILLEGAL, ARBITRARY AND IN DEFIANCE OF LAW AND PRECEDENTS. 3. THE FACTS OF THE CASE(S) IN BRIEF ARE THAT THE A SSESSEE NARESH KASHYAP AND JAGDISH CHAND CHAUDHRY FILED RETURN(S) OF INCOME, ON 19.05.2008 AND 11.08.2008 RESPECTIVELY FOR THE ASSESSMENT YEAR 2008-09. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEES HAD CLAIMED EXEMPTION U/S 10(10C) OF THE ACT AMOUNTING TO RS.5,00,000/- EACH. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE'S AS NOT BEING ELIGIBLE FOR E XEMPTION U/S 10(10C) OF THE ACT. 3 4. THE CIT(A) UPHELD THE ORDER OF THE AO. THE RELE VANT FINDINGS OF THE CIT(A) ARE AS UNDER : KEEPING IN VIEW THE CLEAR CONDITIONS IN THE SCHEME REGARDING FILLING UP OF VACANCIES CAUSED BY THE RELEASE OF OFFICERS AND THE CONFIRMATION BY THE BAN K AT POINT NO.10 ABOVE THAT THE SCHEME DOES NOT COMPLY WITH SECTION 10(10C) OF THE IT ACT AND IS NO T APPROVED BY INCOME TAX DEPARTMENT CONDITIONS NO. (III) & (IV) OF RULE 2BA ARE VIOLATED. THEREFORE, T HE SCHEME IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(10C) OF THE IT ACT,1961. AS A RESULT, THE ASSESSEES ARE NOT HELD ELIGIBLE FOR EXEMPTION U/S 10(10C) OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED AND CONSIDERED THE FACTS OF THE APPEALS. THE LD. ' AR' PLACED RELIANCE, ON THE DECISION, IN THE CASE OF PANDYA VINODCHANDRA BHOGILAL V ITO (2010) 045 DTR 105 ITAT , AHMEDABAD, TO STATE THAT THE FACT-SITUATION OF THE PRESENT APPEALS ARE SQUARELY COVERED BY THE DECISION. HAVI NG CONSIDERED THE DECISION, WE FOUND THAT THE SAME IS APPLICABLE TO THE FACTS OF THE PRESENT CASES. THE RELEVANT AND OPERATIVE PART OF THE DECISION IS REPRODUCED HE REUNDER : 2. THUS THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ABOUT ALLOWABILITY OF EXEMPTION UNDER SECTION 10(10C) 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.3,81,89 4 (INCLUDING EXGRATIA). ON EXAMINATION OF FORM NO.16 THE ASSESSING OFFICER NOTICED THAT ASSESSEE RECEIVE D 4 EXGRATIA OF RS.3,07,236 ON VRS. HE CLAIMED EXEMPTION UNDER SECTION 10(10C) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM 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 THE LEARNED ASSESSING OFFICER DID NOT AGREE AND MADE THE 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 NOT ALLOWING THE CLAIM HAS BEEN THAT SCHEME FOR VRS IS NOT IN ACCORDANCE WITH RULE 2BA. HOWEVER, I T HAS NOT BEEN POINTED OUT HOW THE EMPLOYER HAS NOT FRAMED THE SCHEME IN ACCORDANCE WITH RULE 2BA. EARLIER TILL 2002 SCHEMES WERE REQUIRED TO BE APPROVED BY THE CHIEF COMMISSIONER BUT THEREAFTER SUCH REQUIREMENT HAS BEEN 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 ABOUT THE SCHEME HE COULD HAVE ENQUIRED FROM THE EMPLOYER. SO FAR AS T HE ASSESSEE EMPLOYEE IS CONCERNED, HE CANNOT BE PENALIZED AND TAX WILL BE LEVIED ON HIM ON THE ASSUMPTION THAT THE SCHEME FRAMED BY EMPLOYER IS NO T 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 FIND ANY REASON TO TAKE A DIFFERENT VIEW. FOR THE SAKE OF CONVENIENCE WE REFER TO FOLLOWING PARA FROM THE THIRD MEMBER JUDGMENT IN DY.CIT V. KRISHNA GOPAL SAHAS CASE (SUPRA) AS UNDER : 5 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 T HE EXPRESSION ANY AMOUNT RECEIVED BY AN EMPLOYEE. AT THE TIME OF HIS VOLUNTARY RETIREMENT IN ACCORDANCE WITH ANY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT. IF A PL AIN LITERAL INTERPRETATION OF STATUTORY PROVISION PRODU CED A MANIFESTLY ABSURD AND UNJUST RESULT, WHICH THE LEGISLATURE COULD NOT HAVE INTENDED, THE COURT IS SUPPOSED TO MODIFY THE LANGUAGE USED BY THE LEGISLA TURE EVEN TO DO SOME VIOLENCE TO IT SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. AN EXPRESSION USED IN THE S TATUTE IS NOT ALWAYS TO BE INTERPRETED LITERALLY 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 RETIR EMENT MORE ATTRACTIVE AND BENEFICIAL TO THE EMPLOYEE OPTI NG FOR VOLUNTARY RETIREMENT. THEREFORE, THIS HAS TO BE INTERPRETED IN A MANNER BENEFICIAL TO THE OPTEE FOR VOLUNTARY RETIREMENT, IF THERE IS ANY AMBIGUITY. 6 SUMS PAID ON VOLUNTARY RETIREMENT TO THE EXTENT OF RUPEES FIVE LAKHS ARE EXEMPTED FROM BEING CHARGED T O TAX BY REASON OF SECTION 10(10C). EVEN IF THE PAYMENT IS STRETCHED OVER A PERIOD OF YEARS, THE SAME WOULD NO T 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 DEDUCTIO N 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 AS SESSES CASE, BECAUSE IN THE CASE OF THE ASSESSEE ALSO, THE EMPLOYER BELIEVING THAT THE ASSESSEE IS NOT ENTITLE D 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 HON'BL E 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 SE CTION 89 OF THE ACT IN RESPECT OF THE AMOUNT RECEIVED IN EXCESS OF RS.5,00,000 ON ACCOUNT OF VOLUNTARY RETIREMENT. THUS THEIR LORDSHIPS HAVE HELD THAT THE ASSESSEE, W HO OPTS FOR VOLUNTARY RETIREMENT, IS NOT ONLY ENTITLED TO EXEMPTION UNDER SECTION 10(10C) BUT ALSO REBATE UND ER 7 SECTION 89 OF THE INCOME TAX ACT. SIMILAR VIEW IS TAKEN BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. P. SURENDRA PRABHU (SUPRA) WHEREIN THEIR LORDSHI PS 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 ABOVE THE PRESCRIBED LIMIT; UNDER THE AFORESAID PROVISION, TH E 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 LEARNED AM RELIED UPON THE DECISION OF HON'BLE MADRAS HIGH COU RT IN THE CASE OF CIT V. M.CHELLADURAI & ORS. (2009) 317 ITR 370(MAD) : (2009) 176 TAXMAN 31, HE HAS NOT TAKEN I NTO ACCOUNT THE DECISIONS OF OTHER HIGH COURTS INCLUDIN G THE JURISDICTIONAL HIGH COURT. THE HON'BLE JURISDICTIO NAL HIGH COURT UNDER THE IDENTICAL FACTS HELD THE ASSESSEE, I.E., THE RETIRED EMPLOYEE, TO BE ENTITLED TO DEDUCTION UNDER SECTION 10(10C). SIMILAR VIEW IS TAKEN BY HON'BLE BOMBAY A S WELL AS KARNATAKA HIGH COURTS. THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IS BINDING UPON US AND MO REOVER IF TWO VIEWS ARE POSSIBLE, WHILE INTERPRETING THE P ROVISION, A VIEW WHICH IS FAVOURABLE TO THE ASSESSEE HAS TO B E ADOPTED. HON'BLE JURISDICTIONAL HIGH COURT IN THE ABOVE- REFERRED CASE OF SAIL DSP VR EMPLOYEES ASSOCIATION 1998 V. UNION OF INDIA (SUPRA) HAS ALSO HELD THAT THE PR OVISIONS 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 HON'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 UNDER SE CTION 10(10C) TO THE EXTENT OF RS.5 LAKHS. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE ALLOW THE CLAIM OF ASSESSEE. 8 6. THE ISSUE IN QUESTION IS COVERED BY THE DECISION OF THE HON'BLE TRIBUNAL, AS REPRODUCED ABOVE. THE ASSESSEES/APPELLANTS WERE ALSO EMPLOYED IN THE STAT E BANK OF INDIA. RESPECTFULLY FOLLOWING THE SAID DECISION, THE APPEALS ARE DECIDED IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH NOV.,2011. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 9 TH NOV.,2011 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH