TaxTMI 
TaxTMI 
2026 (6) TMI 344
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....Subsequently, the case was select for the limited scrutiny under the CASS for claiming large relief u/sec. 89 of the Act. The Assessing Officer (A.O) has issued notice u/sec. 143(2) &142(1) of the Act. In response to the notice, the assessee has filed the detailed submissions substantiating the claim. The A.O find that the assessee has claimed the relief U/sec 89 of the Act as he has taken a voluntary retirement from Colgate Palmolive (India) Ltd. in the previous year and the assessee has filed documents explaining that the assessee has not opted for voluntarily retirement and also filed the various documents and submissions. Whereas, the AO has dealt on the provisions of Section 89 of the Act and observed that the assessee has opted for ERS during the previous year 2016-17 and the payment received by the assessee is a compensation and the relief has to be claimed u/sec 89 r.w.r 21A(1)(c) of the Act and has restricted the claim u/sec 89 of the Act to Rs. 2,55,337/- and disallowed the relief to the extent of Rs. 5,93,468/- and passed the order u/sec 143(3) of the Act dated 16.12.2018. 3. Aggrieved by the order of the Assessing Officer, the assessee has filed an appeal before the ....
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....issue "whether the amount received by the assessee under VRS scheme is in the nature of capital receipt and not profit in lieu of salary" has been decided by the Co-ordinate Bench of the Pune Tribunal in favour of the assessee in the case of Shrikant Anantrao Zori (supra) under the identical set of facts. The Ld. DR has not objected to the above contention of the Ld. AR has also not brought on record any contrary material to refute the submission of the Ld. AR. 9. We have perused the order of the Pune Tribunal in the case of Shrikant Anantrao Zori (supra) and find that the Tribunal in turn relying on various other decisions of the Coordinated Bench(es) of the Tribunal including the decision in the case of Mahadev Vasant Dhangekar (supra) as well as the decision of the Hon'ble Calcutta High Court, has decided the impugned issue in favour of the assessee under the similar set of facts. The relevant observations and findings of the Tribunal in the said order are reproduced below:- "8. We have heard the Ld. Representatives of the parties and perused the material on record. The facts are not in dispute. Admittedly, the assessee was a salaried employed of Pfizer Healthc....
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....drew the attention of the Bench to the sub-clause (viii) of the same, which reads as under: "(viii) All Employees who opt for voluntary retirement under the Scheme will not be entitled to any compensation or notice pay under the provisions of the Industrial Dispute Act, 1947 as their cessation from the employment constitute "resignation" and does not constitute "retrenchment" or "termination of employment" by the Company". 14. Referring to the provisions of section 17(3) of the Act, the Ld. Counsel for the assessee submitted that the same are not applicable to the facts of the assessee, which reads as under: "17(1).... 17(2).... (3) "profits in lieu of salary" includes- (i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto; (ii) any payment (other than any payment referred to in clause (10), clause (10A), clause (10B), clause (11), clause (12), clause (13) or clause (13A) of section (10), due to or received by an assessee from an employer or a for....
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....023) 149 taxmann.com 170 (Pune-Trib.) submitted that the Tribunal in the said decision has held that where the assessee had received Rs. 47.21 lacs from the erstwhile company as ex-gratia and letter has been issued by the employer which clearly stated that payment of amount has been made voluntarily to the assessee and was not compensation without establishing letter as non-genuine or without examining sanctity of payment made simply invoking provisions of section 17(3)(iii) for making addition was not justified. 18. Referring to the decision of the Delhi Bench of the Tribunal in the case of ITO vs. Avirook Sen (2024) 161 taxmann.com 462 (Delhi - Trib.), he submitted that the Tribunal in the said decision has held that where the assessee has received certain amounts as lump sum amount after his termination from the service as a settlement out of court with his employer and said payment was voluntary in nature without there being any obligation on part of employer to pay further amount to assessee in terms of any service rule, such payment would not amount to compensation in terms of section 17(3)(i). 19. Referring to the various other decisions as per case law com....
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....y. The assessee was employee of M/s Pfizer Healthcare India Pvt Ltd, Aurangabad during FY 2018-19. The company launched VRS beneficial to the employees on planned closure of its unit. The assessee voluntarily resigned from service w.e.f 08.02.2019 and received compensation and out of that compensation he claimed Rs. 30,49,176/- being salary claimed in Advance as exempt u/s 89 from taxation in his ITR u/s 139(1) of the Act. ........ 14. The submissions made by the assessee have been examined. As the assessee has submitted corroborative and binding judicial pronouncements in support of his claim that the amount of Rs. 30,49,176/- received by him from his employer at the time of cessation of his employment due to closure of the manufacturing unit was a capital receipt, not subject to tax. The assessee has also placed reliance on various case laws, in support of his above claim, and court has held as under "The amounts received were due to loss of employment & not recurring in nature & are not paid in lieu of any salary hence it does not come under the preview of sec. 17(3)(i) as amount of compensation. The said amounts have not been paid against any services of the a....
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....as entitled to remain in service for any period longer after the requisite notice has been given or that the employer was under any obligation to pay anything to the assessee in connection with the termination of his employment other than the salary for the period of notice. Under the circumstances, in its true nature and character, the payment was ex gratia, that is to say, totally voluntary; it was not compensation which implies some sort of an obligation to pay. 6. In this view, it cannot be said that the amount in question was profits in lieu of salary within the meaning of Clause (3) of Section 17. It was not taxable as such. The finding of the Tribunal that the amount was a capital receipt or that it was payment of a casual and non-recurring nature was in the circumstances not necessary. We, hence, do not express any opinion on it. 7. The question of law referred to us in this case, namely: "Whether, on the facts and in the circumstances of the case, the amount of Rs. 24,933 received by the assessee could be treated as income under the charging section or under the section dealing with the computation of income of the assessee ?" 8. is answered in t....