TaxTMI 
TaxTMI 
TaxTMI 
2007 (11) TMI 370
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellate Tribunal, Jaipur Bench, Jaipur. 3. The Tribunal noticed the decisions of the Madras High Court in the case of G. N. Badami v. CIT [1999] 240 ITR 263 and P. Arunachalam v. CIT [2000] 241 ITR 827 and the decision given by the Jaipur Bench of the Tribunal wherein it was held that the amount received under the Voluntary Retirement Scheme (VRS) constitutes compensation for "termination of service" for the purposes of section 17(3) and that the conditions laid down under section 89(1) are satisfied and the assessee is entitled to relief on the amount received under the voluntary retirement scheme as reduced by exemption under section 10(10C) of the Act. 4. In the case of CIT v. J. Visalakshi [1994] 206 ITR 531, the question under consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... object of the clause will not be fully achieved and it would amount to restricting the scope of the beneficial clause. Hence, we are of the view that the Tribunal is justified in holding that the ex gratia compensation of Rs.63,230, received by the assessee consequent on his resignation, is entitled to the relief under section 89(1) of the Act." 5. The view in the case of J. Visalakshi [1994] 206 ITR 531 has been followed by the Madras High Court in the case of CIT v. M. Raman [2000] 245 ITR 856 (Mad), This is what the Madras High Court said (page 856): "The assessee has taken voluntary retirement from the service and received an amount of compensation at the time of his voluntary retirement. The question that arises is whether the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....yment which is made under the provisions of clause (3) of section 17 as a 'profit in lieu of salary'. That being the position, the Tribunal was correct in its view that section 89(1) was applicable to the assessee's case. Our answer for both the questions is in the affirmative, in favour of the assessee and against the Revenue." 7. Mr. R. B. Mathur, counsel for the Revenue submitted that the decision of the Madras High Court in the case of M. Raman [2000] 245 ITR 856 has been challenged by the Revenue by filing special leave petition before the Supreme Court. In this connection, he referred to a Departmental circular which is mentioned at page 1396 of Chaturvedi and Pithisaria Income-tax Laws (5th edition) Suppl. Volume 3. He would submit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of Rs. 5 lakhs under section 89 of the said Act. It appears that the case of the assessee was reopened under section 148 and after getting the response from the assessee, the Assessing Officer disallowed the relief claimed under section 89 vide order dated October 28, 2004. The assessee carried the matter in appeal to the Commissioner (Appeals). The Commissioner (Appeals) was satisfied with the contention of the assessee and allowed him the relief under section 89. The Revenue felt aggrieved by the decision of the Commissioner (Appeals) and filed an appeal before the Income-tax Appellate Tribunal (for short, 'the Tribunal'). The Tribunal heard the appeal with other connected matters and found no illegality in the order of the Commissioner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xes dated April 23, 2001, which indicated that the amount up to Rs.5 lakhs received under voluntary retirement scheme was exempt as per the provisions of section 10(10C) and after allowing this exemption, any balance amount was not eligible for relief under section 89. The Revenue also relied upon further clarification in the letter dated March 4, 2004. The letter dated March 4, 2004, issued by the Central Board of Direct Taxes shows that the issue as to whether relief under section 89 would be eligible for amount of compensation under voluntary retirement scheme in excess of limit of exemption provided under section 10(10C) of the Income-tax Act was considered with the Ministry of Law in view of the judgment in the case of M. Raman [2000] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has nothing to do with the relief under section 89, which is distinct and independent. 8. Our attention was also invited to section 35DDA of the Income-tax Act. We are afraid, that the said section even remotely has no application to the assessee, who is not an employer. This section deals with amortisation of expenditure incurred under the voluntary retirement scheme by the employer. It has nothing to do with the amount received by an employee (assessee) from his employer in connection with voluntary retirement under the voluntary retirement scheme. 9. The Madras High Court in the case of M. Raman [2000] 245 ITR 856 (Mad) observed as under (page 856): 'The as has taken voluntary retirement from the service and received an amount of comp....