TaxTMI 
TaxTMI 
2025 (6) TMI 1611
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..... 2. The assessee has raised following grounds of appeal: "1. On facts, in circumstances of the case and in law, the learned CIT(A) erred in confirming stand of A.O. about relief u/s. 89(1) of Income Tax Act, 1961 read with Rule 21A(1)(c) amounting to Rs. 2,56,540/-. 2. On facts, in circumstances of the case and in law, the learned CIT(A) erred in confirming stand of A.O. about relief u/s 89(1) read with Rule 21A(1)(a) amounting to Rs. 7,11,871/- was rightly disallowed. 3. On facts, in circumstances of the case and in law, the learned CIT(A). erred confirming interest of Rs. 572/- u/s 234C of Income Tax Act, 1961. 4. On facts, in circumstances of the case and in law, the learned CIT(A) erred in confirm....
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....e was an employee of M/s. Century Textile and Industry Ltd. which had incurred heavy losses as a result of which its Worli textile mill unit was shut down in 2008. The company offered voluntary retirement scheme to its mill workers. However, 275 workers including the assessee did not opt for the voluntary retirement scheme declared by the company on 13.11.2006. Subsequently, as per the individual agreements between the company and the workers, the assessee was paid an ex-gratia amount of Rs. 26,43,189/-. It was stated by the company vide letter dated 18.02.2019 that the company had paid one time lumpsum ex-gratia amount to the assessee in lieu of payments till completion of 63 years of age. Since the lump sum was deemed salary paid to asses....
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....facts of the case are identical to the case of the assessee and the co-ordinate bench has allowed the relief claimed u/s 89(1) of the Act, after consideration of the facts and circumstances of lump sum payment made to these employees. Relevant portion of the decision is reproduced below: "16. Considered the rival submissions and material placed on record, we observed from the record that assessee is one of the employee who did not agree for the voluntary retirement scheme offered by the company and subsequently company has pledged a piece of land for the benefit of 275 employees who are not agreed for the voluntary retirement scheme compensation. Subsequently owing to the order of the Labour Commissioner and Municipal Corporation o....
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....l the age of 63 years. The basis of compensation calculated by the company and the company also treated the one-time compensation as a salary paid in advance and deducted the TDS on the same, clearly indicates that the compensation received by the assessee is only salary received in advance not as termination compensation even though this was paid in lumpsum as ex-gratia in one go. 19. As brought to our notice by the counsel for the assessee the case of V.D. Talwar (supra) the Hon'ble Supreme Court held as under: - Learned counsel for the appellant has then relied on Duff (H. M. Inspector of Taxes) v. Barlow [1942] 10 ITR (Suppl.) 157. That was also a case where the parties agreed that the arrangement arrived at betwee....
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.... (supra). In the first two cases the respondents were directors of a limited company. They had no written contracts of services with the company but Article 109 of the company's articles provided that in the event of any director who held office for not less than five years, dying or resigning or ceasing to hold office for any cause other than misconduct, bankruptcy, lunacy or incompetence, the company should pay to him or his representatives by way of compensation for loss of office a sum equal to the total remuneration received by him in the preceding five years. The respondents resigned office as director in these two cases and received from the company as "compensation" a payment calculated in accordance with Article 109. It was hel....
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....t is called "compensation for loss of office." It is, however, a sum agreed to be paid in consideration of the Respondent accepting and serving in the office of Director, and consequently is a sum paid byway of remuneration for his services as Director.' It seems to us that the same principle should apply in the present case. What has been paid to the appellant is his salary in lieu of notice. If that is the true position then the amount paid is taxable under 5.7 of the Indian Income tax Act, 1922. It is not compensation for loss of employment within the meaning of Explanation 2 thereto." 20. Respectfully following the above said decision and the ratio laid down by the Hon'ble Supreme Court in the above case, we ar....