TaxTMI 
TaxTMI 
2022 (8) TMI 1628
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....Necessary cost be awarded to the assessee." 3. The brief facts of the case are the assessee had filed return of income on 29.08.2018 showing income of Rs. 8,03,880/-. Further, assessee has filed revised ITR dated 30.08.2018 declaring total income of Rs. 7,93,630/-. The same ITR was processed by the CPC. The case was selected for complete scrutiny under the e-assessment scheme, 2019 with reasons of "different of salary income as per ITR and TDS data" and "refund claimed". In this case notice u/s 143(2) of the Act was sent on 22.09.2019 and subsequently notices u/s 142(1)j of the act was sent on 18.02.2020 and query letter dated 08.01.2021 through e-mail/e-filing portal which were duly served upon the assessee. On perusal of TDS schedule of ITR filed by the assessee, it was noticed that the assessee had earned an amount of Rs. 34,81,908/- as income under the head salary resulting in tax deduction of Rs. 8,36,435/-. However, the assessee had shown salary income of Rs.7,91,168/- only in part B-TI of the ITR. The assessee has claimed total amount of Rs. 34,90,740/- as exempt income in the ITR. The exempt income and various deductions claimed by the assessee had resulted into a refund....
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....d, Kerala. M/s Instrumentation Ltd. was in loss since a long period of time and therefore, the Government of India in the cabinet meeting held on 30.11.2016 decided to close down the Kota unit of IL and transfer the Palakkad unit to the Government of Kerala. 2. In order to affect the closure of Kota unit of IL, the Department of Heavy Industry offered Voluntarily Retirement Scheme (VRS)/ Voluntarily Separation Scheme (VSS) to the employees of Kota unit (PB 10). Accordingly, on opting the same assessee received total amount of Rs. 52,81,908/- of which Rs. 31,90,740/- was received as VR Exgratia. The assessee claimed the amount of Rs.31,90,740/- as retrenchment compensation exempt u/s 10(10B) of the Act. The AO, however, held that the same is an ex gratia payment received on VRS/VSS which is exempt upto Rs.5 lacs u/s 10(10C) of the Act and thus made addition of Rs. 26,90,740/-. 3. The Ld. CIT(A) confirmed the action of AO by holding that AO correctly has declined the claim on the ground that it was (a) an ex gratia payment and not a compensation; and (b) the status of the employee, in terms of the documentation on record, was of a VRS employee and not a retrenched e....
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.... not mean that the monetary benefits received by assessee due to shut down of the organization in which he was working is an ex gratia payment received on VRS/VSS. One has to see the object and intent behind it. The nomenclature or a description given cannot and should not be allowed to change the true nature of transaction. If the entire facts of the case are analysed, there is no dispute that the compensation is received by the assessee at the time of closing down of Kota unit of IL and therefore, the same is deemed to be compensation received at the time of retrenchment u/s 10(10B). Section 10(10C) applies only when an employee voluntarily retires from his services. This clause is not applicable as assessee is not taking any voluntarily retirement rather he is retrenched from his services on account of closing down of the undertaking. Thus, the compensation received by the employee is on account of retrenchment and not because of voluntarily retirement. Hence, such compensation is exempt u/s 10(10B) and not u/s 10(10C). 3. In this connection reliance is placed on the decision of Single Bench of Hon'ble Madras High Court in case of Hindustan Photo Film Workers Welfar....
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.... Madras High Court in case of CIT Vs. Hindustan Photo Film Workers Welfare Centre & Ors. (2021) 207 DTR 253 (PB 29-32). Thus, the case of assessee is squarely covered by this decision. In the absence of any contrary decision, the same should be applied in the case of assessee also. In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted." 7. The Ld. DR, on the other hand strongly supporting the order of the CIT(A). 8. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The Ld AR for assessee submitted documentary evidence in the compilation of Paper Book containing of 32 pages. The Ld AR for the assessee started his arguments with interesting note of a different case of an individual, who is salaried person and was an employee in M/s Instrumentation Ltd. (IL), Kota (A Government of India Enterprise). The Ld AR for the assessee submitted the company has two units, one at Kota, Rajasthan and another at Palakkad, Kerala. The said company (M/s Instrumentation Ltd) was in loss since a long period of time and therefore, the Government of India in the cabinet meeting held on 30.11.2016 ....
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....d in principle approval of transfer of Palakkad Unit of IL to the Government of Kerala. The approval is as follows: 1. Closure of Kora Unit of IL, which includes all the facilities and assets except the Palakkac2 Unit; in accordance with the provisions of Me Industrial Disputes Act, 1947 (ID Act) and in principle approval for transfer of Patakkad Unit of IL to GOK 2. Offering VRS/VSS to existing employees of Kota Unit of IL, as on date of opening of VRS/VSS based on 2007 notional pay scales with gratuity and leave encashment also at 2007 notional pay scales in accordance with DPE guidelines dated 7.09.2016 on closure; payment of salary/statutory/other dues of employees/employees of company. Accordingly, VRS/VSS for all the permanent employees who are on the roll of the company is introduced with immediate effect in supersession of earlier Schemes with the approval of the Competent Authority, as " ONE TIME BENEFIT". Those employees who apply under the scheme and whose VRS/VSS application is accepted by the Competent Authority will be relieved. Details of VRS/VSS and procedure are as under- 1. The voluntary retirement scheme (VRS/Voluntary....
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.... The Unit Heads shall forward the details of the recommended VRS/VSS applications to AGM (HR & IR), IL, Kota on daily basis for obtaining approval of Competent Authority. AGM (HR & IR) will forward the approved application to AGM(F&A). This issues with the approval of the competent authority. AGM((HR & IR)" 11. To take into deep explanation of the meaning of retrenchment, Sec. 10(10B & Sec. 10(10C are as follows : "'Retrenchment' means the termination of the service, by the employer, of a workman for any reason other than a punishment imposed by way of disciplinary action. Termination of an employee in such a manner is financially compensated by the employer, and such financial compensation is termed as 'retrenchment compensation'. Section 10(10B) of the Income Tax Act provides exemption towards such retrenchment compensation received by the workman. The exemption provisions of section 10(10B) along with the amount of exemption available thereon is explained in the present article. Exemption available under section 10(10B) of the Income Tax Act- Provisions of section 10(10B) exempt any compensation received, at the time of retrenc....
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....ary retirement or voluntary separation or termination of service provided all the conditions are satisfied- 1. The compensation should have been received at the time of voluntary retirement or termination of service. However, in the case of an employee of the public sector company, the compensation should have been received at the time of voluntary separation. 2. The compensation should have been received by the specified categories of an employee (list of the same is provided under the next point). 3. The compensation should have been received in accordance with the scheme of voluntary retirement. In the case of a public sector company, the compensation should have been received in accordance with the scheme of voluntary separation. Categories of employees eligible for exemption under section 10(10C) of the Income Tax Act- Exemption under section 10(10C) is available towards the amount received (receivable) on voluntary retirement or termination of service by an employee of the following undertaking- A public sector company, or A local authority, or Any other company, or Any State Government, or The Central Government, or An authority (establish....