TaxTMI 
TaxTMI 
2014 (8) TMI 527
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....ion 10(10C) of the I.T. Act, 1961, is intended in that scheme. (3)The CIT(A) erred in presuming that requirements of Rule 2BA of I.T.Rules, 1962 have been met ignoring the e-circular of the SBI, as well as the Board's Instruction No.200/34/2009-IT.I dated 6.10.2009 wherein, it is clearly mentioned that the scheme framed by the State Bank of Patiala and State Bank of India does not lay out eligibility for deduction under section 10(10C)." 2.1. The short facts of the case are that the assessee has filed return of income for A.Y.2008-09 on 06.03.2009 declaring a total income of Rs. 4,43,040/-. The assessee was employed with State Bank of India, and has taken voluntary retirement under "Exist Option" after serving 26 years. The assessee claimed of Rs. 5,00,000/- as exempt u/s. 10(10C) of the Income Tax Act. The Assessing Officer denied this exemption on the ground that this "Exit Option" scheme of State Bank of India and State Bank of Patiala are not in accordance with the Rule 2BA, therefore, it was disallowed. 2.3. The matter carried to CIT(A) and CIT(A) has allowed the claim by observing as under: "5. I have considered the facts of t....
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.... salary" is defined under 5.17(3). Even if the assessee has opted for retirement voluntarily, there has to be termination by the employer and, therefore, while terminating service any amount paid on account of voluntary retirement would be "profits in lieu of salary" covered under s.17(3) of the Act. The amount paid on termination of service due to voluntary retirement may be an ex gratia payment, but it would be "profits in lieu of salary" as contemplated under s.17(3) of the Act. Whether the termination of employment took place on account of the voluntary decision of the employee or not is wholly irrelevant. Therefore, the amount received by the assessee being "profits in lieu of salary" as contemplated under s.17(3) of the Act, the assessee would be entitled to the relief under section 89 of the Act. 7. The assessee is entitled to exemption under S.10(10C) and also rebate under S.89 in respect of the amount received of Rs. 5 lakhs on account of voluntary retirement. ii. CIT Vs. KOODATHIL KALLYATAN AMBUJAKSHAN (2009) 309 ITR (Born) In this case the Hon'ble High Court of Bombay held that the object in enacting section 10(1CC) of the Inco....
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....dated 20.10.2005 relying on a letter from Reserve Bank of India (RBI), had advised all field formations that the Optional Early Retirement Scheme (QERS) of RBI does not conform with the provisions of Rule 2BA of Income tax Rules, 1962. Accordingly, the amount received by the employees of RB) opting for OERS did not qualify for exemption under section 10(1OC) of the Income tax Act, 1961. It has been brought to the notice of the Board that the Hon'ble High Court of Bombay vide its order dated 4th July 2008 in the case of Commissioner of Income tax Vs. KodathiI Kallyatan Ambujakshan (2008) 219 CTR (Born) 80 has held that Optional Early Retirement Scheme of RB) satisfies all the conditions of Rule 2BA and amounts received by retiring employees there under were for exemption u/s. 10(10C). That judgment has become final. The matter has therefore been reviewed in the Board in view of the aforesaid order of Hon'ble High Court of Bombay and it has been decided that the employees of RBI who accepted OERS would be entitled for the benefit of section 10(10C)....
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....ucceed and are allowed. The impugned order passed by the High Court is set aside and that of the Tribunal is restored. There will be no order as to costs." iv. SAIL DSP Vs. VR Employees Association 1998 Vs. Union of India (2003 262 ITR 638 (Cal) - In this case it has been held that- "Section 10(10C) of the Act, 1961, uses the expression "any amount received by an employee ...... at the time of his voluntary retirement in accordance with any scheme or schemes of voluntary retirement" If a plain literal interpretation of statutory provision produced a manifestly absurd and unjust result, which the legislature could not have intended, the Court is supposed to modify the language used by the legislature, even to do some violence to it so as to achieve the obvious intention of the legislature and produce a rational construction. An expression used in the statute is not always to be interpreted literally or grammatically. Sometimes it has to be interpreted having regard to the context in which the expression is used and having regard to the object and purpose for which the same is enacted. Sec.10(10C) was inserted in ord....
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....rly exempt under section 10(10C) of the Act upto the extent of Rs. 5 lakhs." Since the issue involved is identical; adhering to the doctrine of decision, we set aside the order of lower authorities and decide the issue in favour of the assessee. In the result, the appeals by the assesses are allowed." Further it was also held that section 1O(1OC) of the Income tax Act 1961 was applicable to the OERS introduced by Reserve Bank of India and set aside the order of assessment order in the writ applications. vi. CIT Vs. P.Surenda Prabhu (2005) 279 ITR 402 (Kar)- In this case the Hon'ble Kamataka High Court has held that - "S.10(l0C) was inserted by the Finance Act, 1987. The exemption provided under the sub-section would cover payments made at the time of voluntary retirement or termination of an employee in accordance with any scheme or schemes of voluntary retirement. The exemption allowed under this sub-section is only to an extent of rupees five lakhs. The second proviso prohibits an employee receiving the exemption u/s. 10(10C) more than once. The ....
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.... at source or sums over and above the exemption of Rs. 5 lakhs. on which it allowed relief u/s. 89(1). On appeals to the High Court by the assessee and Revenue: Held, (i) that the assessee, employee of the respondent-bank was not only entitled to the benefit of exemption u/s. 10(10C) of the Act to the extent prescribed in the provision itself but for any amount over and above the prescribed limit under the aforesaid provision, the assessee was also entitled to relief u/s. 89(1) of the Act r.w Rule 21A." vii. K.Anbalakan Vs. State Bank of India and others in W.P. No.5608 of 2006 (TIT) dated 30.08.2006 - In this case writ petition was filed under article 226 and 227 of the Constitution of India praying to direct the State Bank of India (Respondent No.1) to make full payment of ex-gratia payable to the petitioner pursuant to his voluntary retirement under the Exit Option Scheme without any deduction or recovery as tax deduction at source towards income tax on the said ex-gratia amount except after granting relief under section 10(1OC) and 89(1) of the Income tax Act 1961. 9. The Hon'ble High Court of Karnataka held that the question to be de....