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Issues: (i) Whether ex gratia or compensation received under a Voluntary Retirement Scheme partakes the character of salary. (ii) Whether the benefit of section 89(1) could be granted to an assessee receiving such ex gratia or compensation.
Issue (i): Whether ex gratia or compensation received under a Voluntary Retirement Scheme partakes the character of salary.
Analysis: The receipt under the Voluntary Retirement Scheme was considered in the light of the earlier binding decision of the Court, which had recognized that the relief under section 89 is intended to mitigate hardship caused by the incidence of tax and that no prohibition exists against granting the benefits contemplated by sections 10(10C) and 89 together.
Conclusion: The issue was answered in favour of the assessee and against the revenue.
Issue (ii): Whether the benefit of section 89(1) could be granted to an assessee receiving such ex gratia or compensation.
Analysis: The same reasoning governed the second question, as the Court followed the earlier Division Bench view that the statutory relief remains available in respect of amounts received under a Voluntary Retirement Scheme and that the benefit under section 89(1) is not excluded merely because the receipt also falls within the scheme of section 10(10C).
Conclusion: The issue was answered in favour of the assessee and against the revenue.
Final Conclusion: The Tribunal's view was affirmed and the revenue's challenge failed, resulting in dismissal of the appeal.
Ratio Decidendi: Relief under section 89(1) may be availed in respect of Voluntary Retirement Scheme compensation, and there is no prohibition on simultaneous operation of that relief with the exemption under section 10(10C).
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