TaxTMI 
TaxTMI 
2007 (4) TMI 205
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....ied in law in holding that the ex gratia payment received by the assessees on voluntary retirement is compensation received on termination of employment and, hence, the assessees are entitled to exemption under section 10(10C) as well as relief under section 89(1) of the Income-tax Act, 1961 ?" 3. By consent of counsel on both sides, all these appeals are taken up for final hearing. 4. Although the facts in all these cases are not in dispute, for the sake of convenience, we set out the facts in Appeal No. 12 of 2007. Counsel on both sides agree that the decision in Appeal No. 12 of 2007 would apply to all other appeals. 5. The respondent in Appeal No. 12 of 2007-Mr. Nagesh Kulkarni (here-in-after referred to as the "assessee") was employed with the Central Bank of India. During the financial year relevant to the assessment year 2002-03, the assessee opted for voluntary retirement as per the voluntary retirement scheme issued by the bank. As the assessee fulfilled the conditions of the scheme, he was permitted to retire and he was paid Rs. 10,28,296 on account of voluntary retirement. 6. The assessee filed his return of income in the status of an individual for the asses....
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....mmissioner of Income-tax (Appeals). The Revenue being aggrieved by the order of the Tribunal in the case of the assessee as well as other respondents herein has filed these appeals under section 260A of the Act. 8. Mr. Parchure, learned counsel appearing on behalf of the Revenue while supporting the order of the Assessing Officer submitted that voluntary retirement cannot be treated as termination of employment because, it is the voluntary act of the employee to get retired and there is no termination from the side of the employer. Therefore, the amount given to an employee on voluntary retirement is ex gratia payment and not compensation for termination of employment. In respect of the ex gratia payment received on voluntary retirement specific exemption is granted under section 10(10C) of the Act. Mr. Parchure submitted that relief under section 89(1) of the Act is allowed when salary etc. is paid in arrears or in advance in any one financial year pertaining to more than twelve months. In the present case, the assessee has received one time ex gratia payment under the voluntary retirement scheme and, therefore, the ex gratia payment received by the assessee cannot be treated a....
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.... (vi) a University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956) ; or (vii) an Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961) ; or (viia) any State Government ; or (viib) the Central Government ; or (viic) an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette, specify in this behalf ; or (viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf, on his voluntary retirement or termination of his service, in accord ance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause (i), a scheme of voluntary separation, to the extent such amounts does not exceed five lakh rupees : Provided that the schemes of the said companies or authorities or societies or Universities ....
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.... Act bars the assessee from availing of the benefits under section 89(1) of the Act ? If not, whether the assessee is entitled to the relief under section 89(1) of the Act in respect of the amount received on voluntary retirement ? 14. Dealing with the first question, it may be noted that section 10 of the Act provides that the incomes referred to therein are exempt and are to be disregarded wholly for the purposes of computation of income under the Act. Section 10(10C) of the Act inter alia provides that any amount received by an employee on his voluntary retirement or termination of service from any employer named therein, in accordance with any scheme or schemes of voluntary retirement shall not be included in computing the total income to the extent not exceeding five lakh of rupees. Section 10(10C) applies to the amount received on voluntary retirement up to Rs. 5,00,000 and it does not place any embargo on the amount received on voluntary retirement in excess of Rs. 5,00,000. According to the Revenue, in view of the second proviso to section 10(10C) of the Act, once exemption under section 10(10C) of the Act is availed of up to Rs. 5,00,000, the assessee is not entitled to....
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....nes prescribed by the Board for framing the schemes of voluntary retirement further specify that the employee should not have availed of the benefit of any other voluntary retirement scheme in the past. It may be difficult for the employers to comply with this requirement where the employees do not disclose the fact of their having availed of such benefit in the past. It has, therefore, been provided that where exemption has been allowed to an employee under section 10(10C) for any assessment year, no exemption shall be allowed to him "thereunder" in relation to any other assessment year. Thus, "thereunder" does not mean any section other than section 10(10C). This means the appellant is entitled for relief under section 89(1). Further, there is no specific or express provisions laid down in the Act that when exemption is allowed under section 10(10C), relief under section 89(1) is not allowable. In this connection, reference can be made to other provisions of the Act where twin or double benefits have been curtailed by the statute wherever the statute has specifically so intended. For example, where a deduction has been allowed under section 80CCC, a rebate with reference to su....
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.... employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. Explanation.-For the purposes of this sub-clause, the expression 'Keyman insurance policy' shall have the meaning assigned to it in clause (10D) of section 10 ; (iii) any amount due to or received, whether in lump sum or otherwise, by any assessee from any person- (A) before his joining any employment with that person ; or (B) after cessation of his employment with that person." 22. The apex court in the case of Karamchari Union v. Union of India reported in [2000] 243 ITR 143, while construing the words "profits in lieu of salary" has held thus (page 150) : "In our view, even though there is much substance in the contentions raised by learned counsel for the assessee yet it is to be stated that the Act is a self-contained code and the taxability of the receipt of any amount or allowance is to be determined on the basis of meaning given to the ....
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.... clauses (10), (10A), (10B), (11), (12), (13) or (13A) of section 10. However, it is for the Legislature to decide the same. This would not mean that by giving an exhaustive and inclusive meaning, the word 'profits' can be given a meaning only when it pertains to sharing of profits by the employer. For the assessee, the receipt of such amount would be a profit, gain or advantage in addition to salary, even though it is not named as salary. Therefore, the word 'profits' in the context is required to be under stood as a gain or advantage to the assessee. Hence, it is not possible to accept the contention of learned counsel for the employees that as the city compensatory allowance amount is paid to meet the additional expenditure as contemplated by the statutory service rules, it cannot be said to be profit, gain or additional salary. Under the Act, such receipt of the amount as conceded is covered by the definition of the word 'income' and as provided it would be in addition to salary. Hence, it would be part and parcel of income by way of salary, which would be a taxable one." 23. In the present case, it is not in dispute that the amount received by the as....