TaxTMI 
TaxTMI 
2007 (12) TMI 260
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.... to be referred in short as OERS). During the year, the assessee opted for OERS. The assessee received a sum of Rs. 13,52,784 from the Reserve Bank of India under the said OERS. The assessee filed a return of income claiming exemption of Rs.5 lakhs as per the provisions of section 10(10C) of the Act. The Assessing Officer did not accept the said claim of the assessee on the ground that the Reserve Bank of India itself vide its letter dated August 31, 2005, a copy of which is placed at pages 11 to 13 of the paper book, confirmed that the said scheme of early retirement did not fulfil guidelines laid down in rule 2BA of the Income-tax Rules, 1962, and as such the amount of ex gratia paid under the scheme, i.e., OERS was subject to deduction of tax. It is relevant to state that exemption under section 10(10C) of the Act of Rs. 5 lakhs is available only if the scheme is covered under section 10(10C) of the Act read with rule 2BA of the Income-tax Rules. In view of the above fact that OERS of the Reserve Bank of India under which the assessee opted voluntary retirement did not fulfil the requirements of the provisions of section 10(10C) of the Act read with rule 2BA of the Income-tax Ru....
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....onfirmed to the Assessing Officer vide its letter dated August 31, 2005, in reply to a letter written by the Assessing Officer that its scheme of early retirement did not fulfil guidelines laid down in rule 2BA of the Income-tax Rules and as such amount of payment made under the scheme was subject to deduction of tax. The learned Departmental representative submitted that section 10(10C) of the Act specifically provides that exemption will be available to an employee not exceeding Rs. 5 lakhs only if the scheme is in accordance with such guidelines as may be prescribed. He submitted that rule 2BA of the Income-tax Rules provides guidelines for the purpose of section 10(10C) of the Act. He submitted that the said guidelines are statutory in nature and they are binding while allowing exemption under section 10(10C) of the Act. The learned Departmental representative further submitted that cases relied upon by the learned authorised representative of the assessee (cited supra) are not applicable to the facts of the case as in those cases there was issue regarding interpretation of taxing provision and in that context it was held by the apex court/the hon' ble Kerala High Court tha....
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....ructions are irrelevant in interpreting tax laws. They are to be interpreted reasonably and in consonance with justice. One has to look fairly at the language used, Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 at page 71 stated about rule of construction of a taxing statute as under : "In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." 8. The apex court has also held in the case of CIT v. Vadilal Lallubhai [1972] 86 ITR 2 that in interpreting a taxing provision, one has merely to look to the words of the provision. The hon'ble Madras High Court has held in the case of Venkateshwara Stainless Steel and Wire Industries v. Union of India [1987] TLR 1915 that no tax can be imposed or excluded by analogy. 9. Therefore, we do not accept the contention of the assessee that denial of exemption of Rs. 5 lakhs to the assessee will cause hardship to the assessee as the assessee has opted for retirement under the scheme o....
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....r the guidelines laid down in rule 2BA of the Income-tax Rules. In view of the differences between the bank' s OERS and the guidelines laid down in rule 2BA of the Income-tax Rules, the ex gratia paid under the bank' s scheme does not qualify for exemption under section 10(10C) of the Income-tax Act. As such bank has not allowed the exemption under section 10(10C) of the Income-tax Act 1961, at the time of issuing Form No. 16 pertaining to the assessment year 2004-05, to the employees who had opted for OERS. The same is in accordance with the provisions of the Income-tax Act and the Income-tax Rules." 10. In view of the above, we agree with the learned Commissioner of Income-tax (Appeals) that as long as conditions as laid down in rule 2BA of the Income-tax Rules read with section 10(10C) of the Act are not fulfilled, the assessee is not entitled for exemption under section 10(10C) of the Act. Hence, we uphold the order of the learned Commissioner of Income-tax (Appeals) by rejecting the ground of appeal taken by the assessee. 11. In the result, the appeal of the assessee is dismissed. 12. S. V. Mehrotra (Accountant Member)-I have gone through the order of the lear....
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....ce with the provisions of the Income-tax Act, the employer/deductor of tax plays safe and if there is any doubt about the taxability, normally deduct the tax at source, which the assessee can subsequently claim in its return of income as refund. Therefore, the Reserve Bank of India' s letter dated August 31, 2005, in my humble opinion, cannot be the basis for denying the assessee' s claim. In this regard, I may also refer to 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, wherein (at page 647) it has been observed as under : "No estoppel in law : The question of estoppel because of option exercised with eyes open to the subsequent modification cannot be sustained. What is not otherwise taxable cannot become taxable because of admission of the assessee. Nor can there be any waiver of the right otherwise admissible to the assessee in law. The chargeability is not dependent on the admission of or waiver by the assessee. Chargeability is dependent on the charging section, which needs to be strictly construed. Referring to the decision in CIT v. Bhaskar Mitter [1994]....
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....t a scheme drawn up for overall reduction in the existing strength of the employees. The authorised representative referred to the appropriate part of the abovesaid administrative circular which indicated that ' the bank intends, to control the outflow according to its requirements and towards this end, the bank retains the discretion to limit the number of employees allowed to retire in each category of staff to be covered under the OERS. The bank will have the absolute discretion as to the acceptance or non-acceptance of an officer' s/employee' s application for retirement under OERS depending upon the requirements of the bank. The authorised representative also pointed out to the views expressed in in-house newsletters after implementation of the OERS wherein the Reserve Bank authorities claimed substantial reduction in its staff strength by a large number of 4468. The authorised representative supported the above claim through the statistical data issued by the human resource department in the newsletter of the Reserve Bank of India which is also confirmed in its annual report for 2003-04 on page 202. The authorised representative submitted that the newsletters were....
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....orised representative of the remaining appellants pleaded that the Assessing Officer's observations in the remand report regarding OERS being not a scheme drawn up for overall reduction in existing strength of the employees was completely baseless and as would be evident from the annual report of the Reserve Bank of India for 2003-04 at page 201, it has been clearly stated that the bank had to have technical upgradation towards streamlining the work in its general and core function. It was claimed that under OERS, 4,468 officers/employees have retired all over India and the manpower strength has come down by this number in the Reserve Bank of India. The authorised representative, therefore, claimed that comment of the Assessing Officer in regard to rule 2BA(iii) was without any basis and factually wrong. D. Conclusion : On careful perusal of the Assessing Officer' s comments, in my view the OERS though uses a different phraseology, the tenor of the scheme shows that it has been drawn up only to reduce the number of existing workforce in the Reserve Bank of India. In the present times for fear of adverse comments, organizations/unions avoid indicating a sch....
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....rom the remarks of the Assessing Officer that the Reserve Bank of India has not specifically stated whether it has made recruitment to the posts which have fallen vacant due to OERS. There was no material on record to show that all or majority of vacancies caused by voluntary retirement under the OERS have been filled up by the Reserve Bank of India. In the authorised representative\qs opinion, the Reserve Bank of India' s assertion of its right to make need based recruitment against such vacancies in future does not answer the question specifically and can not be taken as reasonable basis for the Assessing Officer to hold that the conditions in rule 2BA(iv) was not fulfilled. It was claimed that the reply of the Reserve Bank of India as mentioned by the Assessing Officer, is vague, evasive and not to the point. Even if there is some need based recruitment sometime after the retirement, it would not disentitle the employees from satisfying the condition provided in rule 2BA(iv). (iii) Sri S. Chaudhury, the authorised representative, pleaded strongly against the Assessing Officer' s claim about the Reserve Bank of India not binding itself to fill up the vacancy. The....
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.... Thus guidelines in rule 2BA(iv) is broadly complied with by OERS of the Reserve Bank of India." 18. I am in agreement with the findings of the learned Commissioner of Income-tax (Appeals). 19. Learned counsel has further pointed out that the Department has not filed any appeal against the above order of the learned Commissioner of Income-tax (Appeals), Kolkata, and therefore, similarly placed assessees should not be denied this exemption. This plea of learned counsel has not been controverted by the Department. In my opinion, learned counsel\qs argument carries considerable force. The assessees who are on same footing should not be denied exemption only because they are geographically placed differently. There should be consistency in allowing the exemption to all the employees by the Department. In this regard I may refer to the decision of the hon'ble Madras High Court in the case of Seshasayee Paper and Boards Ltd. v. IAC [1986] 157 ITR 342 wherein it has been held that finality of order cannot be disturbed except by process authorized by law. I may also refer to the decision of the hon'ble Supreme Court in the case of CIT v. Rao Thakur Narayan Singh [1965] 56 ITR....
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....he Reserve Bank of India ?" 25. The facts of the case are that the Reserve Bank of India announced VRS known as optional employees retirement scheme (hereinafter referred to as OERS). During the year under consideration, the assessee opted for OERS. The assessee received a sum of Rs. 13,52,784 from the Reserve Bank of India under the said OERS. In the return of income, the assessee claimed exemption of Rs. 5 lakhs as per the provisions of section 10(10C) of the Act. The Assessing Officer did not accept the said claim of the assessee on the ground that the Reserve Bank of India itself vide its order dated August 31, 2005, confirmed that said scheme of early retirement did not fulfil the guidelines laid down in rule 2BA of the Income-tax Rules and as such amount paid was treated as ex gratia and subjected to deduction of tax at source. The learned Commissioner of Income-tax (Appeals) also confirmed the action of the Assessing Officer. On appeal to the Tribunal, the learned Judicial Member agreed with the finding of the learned Commissioner of Income-tax (Appeals). However, the learned Accountant Member opined that the assessee has fulfilled the conditions laid down in rule 2BA of ....
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....come-tax (Appeals) as well as the learned Judicial Member. He stated that the assessee has to fulfil the conditions prescribed under rule 2BA of the Income-tax Rules, then only he will be entitled to exemption under section 10(10C) of the Act. He, therefore, submitted that the order of the learned Commissioner of Income-tax (Appeals) should be sustained. The learned Departmental representative was fair enough to admit that he was unable to lay his hands on any decision of the Tribunal wherein exemption under section 10(10C) of the Act was denied to the employees of Reserve Bank of India who took voluntary retirement under the above scheme. 29. I have carefully considered the arguments of both the sides and perused the material placed before me. I find that the Tribunal, Mumbai Benches has considered similar issue in group cases of 222 assessees who also took voluntary retirement from the Reserve Bank of India under the same scheme in I. T. A. No. 6384/Mum/2006, etc. (supra). The Income-tax Appellate Tribunal considered the facts and the arguments of both the sides at length and concluded as under : "Sums paid on voluntary retirement to the extent of rupees five lakhs ar....