2013 (5) TMI 751 - AT - Income Tax

Tribunal rules against Revenue in exemption dispute, upholds partial relief, penalty deletion.

The tribunal dismissed all five appeals of the Revenue concerning the disallowance of exemption u/s. 10(10C) for an ex-gratia payment under the Exit ... Claim of exemption u/s. 10(10C) - assessee has received ex-gratia payment on voluntary retirement from State Bank of India under the Exit Option Scheme - as per AO Exit Option Scheme of State Bank of India did not fulfil the basic conditions as laid down in Rule 2 BA of the I.T. Rules - CIT(A) deleted the disallowance - Held that:- Decision in the case of Shri Narendra J. Chokshi [2013 (5) TMI 234 - ITAT AHMEDABAD] is equally applicable to Assessee's case wherein held as relying on CIT vs. G. V. Venugopal [2004 (12) TMI 35 - MADRAS High Court] that there is no prohibition to the twin benefits in respect of the amount received under the voluntary retirement scheme - The mere fact that the relief has been spread over several years does not mean that the relief is not in respect of a particular assessment year, thus assessee is eligible to claim simultaneous benefit under section 10(10C) as well as section 89(1) in respect of the compensation received under the voluntary retirement scheme – Further, it is well settled that if two reasonable interpretations of taxing statutes are possible, the one in favour of the assessee should be accepted. In favour of assessee. Penalty u/s. 271(1)(C) - Held that:- As the addition on which the penalty has been levied itself is deleted, there is no question of levy of penalty u/s. 271(1)(C). Against revenue. Issues Involved:- Appeal filed by Revenue against CIT(A) orders for Assessment year 2007-08.- Disallowance of exemption u/s. 10(10C) for ex-gratia payment under Exit Option Scheme.- CIT(A) granting partial relief to Assessee.- Disagreement between Assessing Officer and Assessee regarding exemption claim.- Appeal by Revenue against CIT(A) order deleting penalty under section 271(1)(C) of the Act.Analysis:1. The appeals were filed by the Revenue against CIT(A) orders for Assessment year 2007-08. The issue in dispute was the disallowance of exemption u/s. 10(10C) for an ex-gratia payment received by the Assessee under the Exit Option Scheme. The Assessee, an employee of State Bank of India, initially declared a total income of Rs. 10,11,880/-, later revising it to Rs. 5,11,875/- after claiming exemption of Rs. 5 lacs. The Assessing Officer disallowed the exemption claim as the scheme did not fulfill the criteria under Rule 2BA of the I.T. Rules, leading to the dispute. CIT(A) granted partial relief to the Assessee, prompting the Revenue to appeal.2. The core issue revolved around the Assessee's entitlement to deduction u/s. 10(10C) for the ex-gratia payment. The Assessee claimed the amount to be exempt under this section, while the Assessing Officer disagreed, leading to the appeal. The Assessee's case was compared to similar cases before the tribunal, where decisions favored the Assessee's claim for exemption. The Assessee's reliance on precedents and High Court judgments supported the claim for deduction, emphasizing the consistency in granting such exemptions.3. The disagreement between the Assessing Officer and the Assessee highlighted the interpretation of the provisions under section 10(10C) regarding the exemption for ex-gratia payments. The Assessee's argument, supported by case laws and decisions from other High Courts, aimed to establish the eligibility for the claimed deduction. The tribunal considered the factual matrix of the case, emphasizing the Assessee's employment with State Bank of India and the voluntary retirement under the Exit Option Scheme as crucial factors in determining the exemption claim.4. Another issue addressed was the penalty levied under section 271(1)(C) of the Act concerning the disallowed deduction u/s. 10(10C). The CIT(A) deleted the penalty, citing the deletion of the quantum addition made by the Assessing Officer. The Revenue appealed this decision, leading to a detailed analysis by the tribunal. The tribunal upheld the CIT(A)'s decision to delete the penalty, considering the deletion of the quantum addition as the basis for dismissing the penalty imposition.5. In conclusion, the tribunal dismissed all five appeals of the Revenue, emphasizing the consistency in decisions and the factual similarities among the cases. The judgment highlighted the importance of precedents, High Court rulings, and factual alignment in determining the eligibility for deductions and exemptions under the Income Tax Act. The detailed analysis and reliance on legal interpretations and precedents contributed to the comprehensive resolution of the issues raised in the appeals.