2019 (4) TMI 374 - HC - Income Tax

Court upholds exemption under Income Tax Act for bank employee's voluntary retirement. Legal precedent supports exemption for retirement amounts.

The Income Tax Officer, The Assistant Commissioner of Income Tax Versus PR. SL. Sathappan

The High Court of Madras dismissed the Revenue Department's appeal and upheld the exemption under Section 10(10C) of the Income Tax Act for amounts ... Exemption u/s 10(10C) - amount received on voluntary retirement from retirement from Bank - fulfillment of conditions as prescribed under Rule 2B - CBDT letter dated 8th May, 2009 state that retiring employees of the RBI would be eligible for exemption u/s 10(10C) - HELD THAT: - In view of the judgment in CHANDRA RANGANATHAN VERSUS CIT [2009 (10) TMI 498 - SUPREME COURT OF INDIA], we do not find any merit in the present writ appeal filed by the Revenue. The same is liable to be dismissed and the same is accordingly, dismissed Issues:Exemption under Section 10(10C) of Income Tax Act for amount received on voluntary retirement.Analysis:The High Court of Madras heard appeals by the Revenue Department against a Single Judge's order granting exemption to the respondents under Section 10(10C) of the Income Tax Act for amounts received on voluntary retirement from a bank. The provision allows exemption for employees of public sector companies, subject to conditions in the Income Tax Rules. The Revenue Department's counsel acknowledged that previous judgments, including those by the Bombay High Court and the Madras High Court, favored exempting such amounts. The counsel highlighted a Supreme Court case where the appeal was dismissed but the core legal questions were left open. However, no material was presented to justify denying exemption in this case. The court noted that various High Court judgments, including those from Madras, supported granting exemptions for voluntary retirement amounts, a stance also upheld by the Supreme Court in related cases.The court referred to a Supreme Court order concerning a similar scheme by the RBI, where it was clarified that retiring employees of the RBI were eligible for exemption under the Income Tax Act. Citing this precedent, the High Court found no merit in the Revenue's appeal and dismissed it, upholding the exemption for the respondents. The judgment emphasized that the matter had been extensively reviewed by different High Courts and approved by the Supreme Court, establishing a clear legal position on granting exemptions for voluntary retirement amounts. Consequently, the court dismissed the appeal and closed the related petitions, without imposing any costs on the parties involved.