TaxTMI 
TaxTMI 
2026 (7) TMI 399
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.... tax has not been paid, the case of the assessee was reopened u/s. 147 of the Income Tax Act, 1961 (the "Act") by issue of the notice u/s. 148 of the Act on 29.03.2023. In response to the notice issued u/s. 148 of the Act, the assessee filed his return of income for AY 2019-20 declaring income of Rs. 6,04,060/- and claimed the said amount of Rs. 34,66,866/-received from Pfizer India as exempted income being capital receipts of ex-gratia and severance payment received from the employer i.e. Pfizer India in lieu of cessation of the employment with the company. During the assessment proceedings, the assessee contented that the impugned amount has been received by the assessee on settlement from Pfizer India is in the nature of capital receipt because the same were received de-hors any contract and paid voluntarily by the company and supported by various case laws covering the impugned issue in favor of the assessee. However, the Ld. AO rejected the contention of the assessee and made addition of Rs. 34,66,866/- holding that the said amount is revenue receipt and chargeable to tax by invoking the provisions of section 56(2)(xi) of the Act, vide his order dated 26.03.2024 passed u/s. 14....
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.... end also. M/s Pfizer India Ltd has claimed the compensation paid of Rs. 34,66,866/- as revenue expenditure and deducted tax at source also. Further, the appellant adjusted TDS tax against the tax payable. Hence, the appellant claim of compensation received is capital in nature is not acceptable. The appellant has relied upon many judicial decisions and the same are perused. The facts of the appellant are different from the facts of the judicial decisions which are relied upon. In view of the above-mentioned facts and discussions, in the absence supporting documents for appellant claim, the undersigned does not find any reason to interfere with the addition of Rs. 34,66,866/- is made in the assessment order. The appellant has raised the objection on the addition of Rs. 34,66,866/- through ground nos. 2 to 5 therefore, ground nos. 2 to 5 are decided against the appellant." 4. Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal: "1. The learned CIT(A) has erred by ignoring all the merits of the case & has summarily dismissed the appeal & he has erred in dismissing the appeal on a vague ground by stating that once the Co. claims....
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....herein that the retirement of the employees under the Scheme does not amount to retrenchment or termination of employment by the company. Thus, as per the Scheme there is no termination of employment of the assessee. 5.2 The Ld. AR further submitted that the provisions of section 56(2)(xi) are applicable on termination of employment. Termination of employment and voluntarily retirement are two different concepts. In support thereof, the Ld. AR drew our attention to the provisions of section 10(10C) of the Act whereby it has been clarified that any amount received from various person as provided therein by the employer "on his voluntarily retirement or termination of his services......" Similarly section 80JJAA(2)(iii)(b) provides therein that "any lump sum payment paid or payable to employee at the time of termination of his service or superannuation or voluntarily retirement....." He therefore submitted that the legislature has specifically used the term voluntarily retirement and termination separately. He accordingly submitted that termination does not include voluntarily retirement and both the terms are to be understood and applied differently. In the instant case, the empl....
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....)(xi) of the Act, however, the said amount has not been added and assessment has been completed by the respective AO treating the same as capital in nature. He, therefore, submitted that the Ld. AO has failed in adhering to the principle of consistency and binding precedence. In view of this, he argued that in the instant case, the amount received by the assessee from Pfizer India on his voluntarily retirement under the Scheme should therefore be treated as capital receipt and addition made by the Ld. AO and confirmed by Ld. CIT(A)/NFAC should be deleted. 6. The Ld. DR, on the other hand, strongly supported the order of the Ld. AO and the Ld. CIT(A)/NFAC. 7. We have heard the Ld. Representatives of the parties and perused the material available on record as well as the paper book(s) filed by the Ld. AR on behalf of the assessee. We have also perused various judicial precedents cited by the Ld. AR. The facts of the case are not under dispute. Admittedly, the assessee was an employee of Pfizer India and covered under the Scheme framed for its permanent employees due to closure of the company's plant at Aurangabad. Under the said Scheme, the assessee received an amount of Rs. 34....
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.... taxation in the case of voluntarily retirement vis-à-vis termination of employment separately which is emanating from the provisions of section 10(10C) and section 80JJAA(2)(iii)(b) of the Act as argued by the Ld. AR. It is not disputed that the employment of the assessee has not been terminated by Pfizer India but the assessee opted for voluntarily retirement under the Scheme which was voluntarily offered to the assessee. 12. We have perused the order of the Co-ordinate Bench of the Tribunal in the case of Ashok Raghunathrao Kulkarni (supra) (page 37-52 of the Legal Compilation refers) and find that in Para 13 and Para 28 of the said order, the Tribunal under the similar set of facts as that of the assessee in the present appeal, observed and held as under: "13. Referring to other terms and conditions as per clause (11), the Ld. Counsel for the assessee 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 employmen....