2011 (1) TMI 1379 - AT - Income Tax

Tribunal grants exemption under Income Tax Act for ex-gratia payment on voluntary retirement

Jeevan Chandra Kabadwal Versus. DCIT,

The Tribunal allowed the appeal filed by the appellant, a Deputy Manager at State Bank of India, regarding the exemption claim u/s 10(10C) of the Income ... - Issues Involved: Appeal against order of ld. CIT(A) for A.Y. 2008-09 regarding exemption claim u/s 10(10C) of Income Tax Act, 1961 for ex-gratia payment received under voluntary retirement scheme.Summary:The appellant, a Deputy Manager at State Bank of India, took voluntary retirement and received an ex-gratia payment. The AO disallowed the claim of exemption u/s 10(10C) of the Act, stating that the scheme did not comply with the rule. The ld. CIT(A) upheld the AO's decision, leading to the appeal.The appellant argued that a similar case decided by ITAT Kolkata Bench favored the assessee's claim for exemption u/s 10(10C). In that case, an employee of Standard Chartered Bank received compensation under an Early Separation Plan and was allowed the exemption despite the employer's objection. The Tribunal held that the provisions of sec. 10(10C) should be interpreted in favor of the optee for Voluntary Retirement.After considering the submissions, the Tribunal found no justification in rejecting the appellant's claim based on the employer's statement about non-compliance with the rule. Citing the Kolkata Bench decision, the Tribunal held that the ld. CIT(A) wrongly rejected the claim, and the addition made by the AO was deleted, allowing the appeal.In conclusion, the appeal filed by the assessee was allowed, and the order was pronounced in the Open Court on 14.1.11.