TaxTMI 
TaxTMI 
2008 (2) TMI 420
X X X X Extracts X X X X
X X X X Extracts X X X X
.... respectively 2. Tax Cases (Appeals) Nos. 101, 410, 22, 425 and 1360 of 2007 relate to the employees of ICICI Bank and Tax Cases (Appeals) Nos. 1353 and 1397 of 2007 relate to the employees of the Reserve Bank of India. 3. As the relief sought for the contentions raised and the ultimate decision rendered are one and the same, except the assessees in each of the appeals, these appeals are taken together and are disposed of by this common order. Tax case (Appeal) No. 101 of 2007 is taken as a typical case in respect of the employees of the ICICI Bank and Tax Case (Appeal) No.1353 of 2007 is taken as a typical case in respect of the employees of the Reserve Bank of India. Tax Case Appeal No. 101 of 2007 (ICICI Bank Ltd.) 4. The assessee filed return of income for the assessment year 2004-05 on October 10, 2004, admitting the income of Rs. 4,25,310. A scrutiny assessment was initiated in the case of the assessee. The assessee claimed deduction under section 10(10C) of the Income-tax Act, 1961, for a sum of Rs. 5 lakhs from the benefit received on his voluntary retirement under the scheme called "Early Retirement Option Scheme". During the course of scrutiny proceedings, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... filed the details of the Employees Retirement Option Scheme. The Commissioner of Income-tax (Appeals) also confirmed the order of the Assessing Officer on the same ground. Now, the assessee before us, during the course of hearing, filed a copy of the Early Retirement Option, 2003, from his employer ICICI Bank Limited, which is called as 'The ICICI Bank Early Retirement Option, 2003'. In this view of the matter, we have no hesitation in upholding the claim of the assessee for the relief under section 10(10C). Accordingly, this appeal of the assessee is allowed." 7. The correctness of the same is canvassed in Tax Case (Appeal) No. 101 of 2007 by raising the following questions of law: "1. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is eligible for the benefit of section 10(10C), without even going into the details of the Early Retirement Option Scheme to see if it fulfils the criteria laid down for voluntary retirement schemes? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to deduction under section 10(10C), when the scheme under which the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he following questions of law: "1. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is eligible for the benefit of section 10(10C), without even going into the details of the Early Retirement Option Scheme to see if it fulfils the criteria laid down for voluntary retirement schemes ? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to deduction under section 10(10C), when the scheme under which the amount was paid does not fulfil the criteria prescribed under rule 2BA of the Income-tax Rules ?" 13. Heard the learned counsel on either side and perused the materials available on record. 14. As the claim is made under section 10(10C) of the Income-tax Act, we are of the view that the relevant provision has to be extracted: "10. Incomes not included in total income.-In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-… (10C) any amount received by an employee of- (i) a public sector company; or (ii) any other company; or (iii) an authority estab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961) (viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf, at the time of his voluntary retirement, or voluntary separation shall be exempt under clause (10C) of section 10 only if the scheme of voluntary retirement framed by the aforesaid company or authority, or co-operative society or University or institute, as the case may be, or if the scheme of voluntary separation framed by a public sector company is in accordance with the following requirements, namely:- (i) it applies to an employee who has completed 10 years of service or completed 40 years of age ; (ii) it applies to all employees (by whatever name called) including workers and executives of a company or of an authority or of a co-operative society, as the case may be, excepting directors of a company or of a co-operative society; (iii) the scheme of voluntary retirement or voluntary separation has been drawn to result in overall reduction in the existing strength of the employees ; (iv) the vacancy caused by voluntary retirement or voluntary separation is n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... too pressurizing. Many of them, who have been with the organization for a long period of time have regularly expressed a desire to have an early exit option. The scheme is being introduced in response to the competitive environment on the one hand and the desire of employees on the other." 18. The object for introduction of the Optional Early Retirement Scheme in the Reserve Bank of India, as set out in its Administration Circular No.1, dated August 11, 2003, reads as under: "Introduction of Optional Early Retirement Scheme As a result of several innovative measures taken by the Bank during the last 2/3 years, a need has arisen for providing some alternative optional facilities and work opportunities to our staff, providing training and re-skilling opportunities and such other measures which are location specific and which can provide additional benefits to the staff/officers who wish to avail of them. Several suggestions were made to the management that, in the altered context, some of the employees would like to look at an opportunity to seek retirement at their own discretion provided the scheme is attractive and provides them with additional financial benefits so that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmed the Department in the following manner: "ICICI 1. Under section 10(10C) of the Act, exemption from tax is available on amounts received under scheme of voluntary retirement or scheme of voluntary separation framed in accordance with the guidelines prescribed in rule 2BA of the Rules. As explained earlier, since the ERO 2003 Scheme of the bank does not satisfy all the requirements specified in rule 2BA of the Rules, the compensation paid under this scheme does not qualify for the exemption under section 10(10C). 2. One of the important conditions specified for eligibility of ERO scheme for tax exemption under section 10(10C) is that the vacancy caused by the voluntary retirement or voluntary separation is not filled in. It may be noted that the ICICI Bank ERO 2003 Scheme was not intended as a staff reduction but a soft exit option to address the interest of those of its employees who were seeking alternative options to the level of adaptability and change that the current environment demands or those who are desirous of early retirement after a long period of service with the organization. The same is brought out in point No. 2 of the ICICI Bank IRO Scheme, 2003, copy ....