2007 (9) TMI 438 - AT - Income Tax

Former RBI employees win exemptions & relief under Income-tax Act, Tribunal decision favors assessees

The Tribunal upheld the CIT(A)'s decision in favor of former RBI employees, allowing exemptions under sections 10(10C) and relief under section 89(1) of ... Voluntary retirement payments, Issues Involved:1. Eligibility for exemption u/s 10(10C) of the Income-tax Act.2. Eligibility for relief u/s 89(1) of the Income-tax Act.Summary:1. Eligibility for exemption u/s 10(10C) of the Income-tax Act:The appeals were filed by the revenue against the orders of CIT(A), New Delhi, which allowed exemptions claimed by former RBI employees who took retirement under the Optional Early Retirement Scheme (OERS). The Assessing Officer had denied the exemption u/s 10(10C) based on RBI's clarification that the OERS did not comply with rule 2BA of the Income-tax Rules, 1962. However, the CIT(A) referred to the scheme and the decision of the Hon'ble Calcutta High Court in the case of Sail DSP VR Employees Association 1998 v. Union of India [2003] 262 ITR 638, and held that the conditions of section 10(10C) read with rule 2BA were fulfilled, allowing the maximum exemption of Rs. 5 lakhs. This decision was supported by various ITAT benches and High Court rulings, including the cases of Vaishali A. Shelar v. Asstt. CIT [2007] 14 SOT 407, CIT v. P. Surendra Prabhu [2005] 279 ITR 402 (Kar.), and CIT v. J. Ramamani [2006] 286 ITR 616 (Mad.).2. Eligibility for relief u/s 89(1) of the Income-tax Act:The CIT(A) also held that any sum received in excess of Rs. 5 lakhs was eligible for relief u/s 89(1) of the Act, referencing the decision of the Hon'ble Madras High Court in the case of CIT v. G.V. Venugopal [2005] 273 ITR 307. This position was further supported by ITAT benches in the cases of Smt. Santosh Gautam and Shri Dharam Pal, which concluded that the assessees were entitled to simultaneous benefits under sections 10(10C) and 89(1). The Tribunal emphasized that the scheme framed by RBI was covered by the provisions of section 10(10C) and that the compensation received was also covered by section 10(10C) read with rule 2BA of the IT Rules, 1962. The Tribunal cited multiple case laws, including CIT v. S. Sunder [2006] 284 ITR 687 (Mad.), which supported the eligibility for simultaneous benefits.Conclusion:After examining the orders and relevant case laws, the Tribunal found that the facts and issues in the instant cases were identical to those in the cited decisions. Consequently, the Tribunal upheld the orders of the CIT(A), deciding in favor of the assessees and against the revenue. The appeals filed by the revenue were dismissed.