TaxTMI 
TaxTMI 
2009 (7) TMI 173
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..../ voluntary separation framed in accordance with the guidelines prescribed and specified in Rule 2BA and that the Bombay High Court in their order reported in CIT v. Chhajer Packaging & Plastics (P) Ltd. (2008) 214 CTR (Bom) 389 : (2008) 300 ITR 180 (Bom) decided that the monetary limit fixed administratively will not apply to the cases of substantial question of law. 3. The assessee derived salary from the Standard Chartered Bank and received compensation of Rs. 18,87,798 as per early separation plan (ESP). During the relevant previous year the assessee claimed deduction of Rs. 5,00,000 under Section 10(10C) of the Act. 3.1 The employer vide their letter dt. 14th Nov., 2006 stated that the employees availing the said ESP scheme are not eligible for exemption under Section 10(10C) of the Act as the scheme was not in conformity with the provision of Rule 2BA(i) to (v). Thus, the AO disallowed the exemption under Section 10(10C) of the Act amounting to Rs. 5,00,000. 4. Aggrieved, the assessee filed appeal before the learned CIT(A). 5. The learned CIT(A) following the various decisions of the Kolkata Benches of the Tribunal allowed relief to the assessee. 6. Aggrieved, the Revenu....
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....ment of Rule 2BA of the IT Rules. The exemption of tax under Section 10(10C) is available on the amount received under a scheme of voluntary retirement/voluntary separation framed in accordance with the guidelines prescribed and specified in Rule 2BA and that the Bombay High Court in their order in CIT v. Chhajer Packaging & Plastics (P) Ltd. (2008) 214 CTR (Bom) 389 : (2008) 300 ITR 180 (Bom) decided that the monetary limit fixed administratively will not apply to the cases of substantial question of law. 2. The CIT(A) in his finding has relied on certain orders and has written in his concluding paras as follows: The issue of allowing the exemption under Section 10(10C) of the Act was examined by Hon'ble Tribunal of Mumbai and Chennai and had held the said exemption is allowable from out of the compensation received by the retired employees. The Hon'ble Tribunal, 'B' Bench of Kolkata in ITA Nos. 798/Kol/2006, 810/Kol/2006; 813/Kol/2006 relating to the similar employee of the same bank has held that each of the assessees is entitled to get the exemption to the extent of Rs. 5 lakhs under Section 10(10C) of the Act. Respectfully following the decision of the juris....
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.... para i.e. para 20 the Hon'ble High Court has answered the question in favour of the Revenue. My learned Brother has relied on the same. 4. The Tribunal in a consolidated order of the Tribunal "C" Bench, Kolkata in ITA Nos. 636 to 641/Kol/2008 and C.O. Nos. 33, 40, 44 and 45/Kol/2008 in the case of Biswanath Biswas and Ors. has dismissed the Revenue's appeals by placing reliance on some other decisions which are analysed hereunder: (i) Case of CIT v. M. Raman (1999) 152 CTR (Mad) 497 : (2000) 245 ITR 856 (Mad) passed on 4th March, 1997 where the Hon'ble Madras High Court has held that the amount received by the employee at the time of voluntary retirement of service would be regarded as salary and the relief under Section 89 of the IT Act would be admissible in respect of such sum. (ii) CIT v. Nagesh Devidas Kulkarni and Ors. (2007) 210 CTR (Bom) 471 : (2007) 291 ITR 407 (Bom). In this case it has been held that Section 10(10C) of the IT Act, inter alia, provides that any amount received by an employee on his voluntary retirement or termination of service from any employer named therein, in accordance with any scheme or schemes of voluntary retirement shall not be in....
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....untary retirement. The exemption allowed under this sub-section is only to an extent of rupees five lakhs. The second proviso prohibits an employee receiving the exemption under Section 10(10C) more than once. The proviso makes it clear that once an employee has taken the benefit of exemption from tax provided under Section 10(10C), he will not be allowed to claim exemption in any other assessment year. This is only to prevent the misuse of the provisions of Section 10(10C) of the Act by employees, who could jump from one employer to another employer and take the benefit under the provision of Section 10(10C) of the Act. Secondly, the proviso appended to the section speaks of "exemption" and not "relief as envisaged under Section 89(1) of the Act. If an exemption under the Act is claimed and granted by the AO for any assessment year, the assessee will not be eligible to claim exemption in relation to any other assessment year. The second proviso will not bar the assessee to claim relief under Section 89(1) of the Act on the amount received by way of compensation on voluntary retirement from service. Rule 2BA of the Rules prescribes the requirements for a scheme of voluntary retirem....
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....is case it has been held that ex gratia amount received by the assessee by reason of his resignation from employment is not held as falling under Sub-section (3) of Section 17, it cannot also be construed as income liable to tax because, it is not the amount earned or paid for the service rendered and. as such it will be only a capital receipt. (v) P. Arunachalam v. CIT (2000) 241 ITR 827 (Mad) (order passed on 19th Feb., 1998)-In this case it has been held that conditions prescribed under Section 17(3)(i) of the IT Act, 1961 were satisfied in this case and the amount of compensation received by the assessee was liable to be treated as salary. This decision placed reliance on the decision reported in G.N. Badami v. CIT (1998) 144 CTR (Mad) 289 : (1999) 240 ITR 263 (Mad) held by the same Madras High Court where it has been held that the amount of Rs. 52,200 received by the assessee as payment under the "voluntary separation programme" from the Government was liable to be included in the assessee's total income for the asst. yr. 1997-98. (vi) Case of CIT v. G.V. Venugopal (2005) 193 CTR (Mad) 661 : (2005) 273 ITR 307 (Mad) decided on 6th Dec, 2004 wherein it has been held as ....
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....elladurai and Ors. (supra) i.e. para 5, where the Hon'ble Madras High Court is of stringent view that voluntary requirement scheme should be in consonance with the provisions of Rule 2BA of the IT Rules. The AO has also refused the exemption under Section 10(10C) of the Act to the assessee in the impugned case for the same reason. As per the decision of the Hon'ble Karnataka High Court cited in para 4(iii) as above in the case of CIT v. P. Surendra Prabhu (supra), it clearly says that simply because Rule 2BA does not speak of termination, it cannot be concluded that a person who claims exemption under Section 10(10C), is not entitled to claim relief under Section 89. It has further subscribed to the view that it is a rule framed for the purpose of working out of the provisions of the Act and it is the section which prevails over the rule. The section specifically speaks of voluntary retirement/termination of an employee in accordance with the scheme to be entitled for the benefit of exemption under the section. 6. My learned Brother is of the view that the decision of the Hon'ble Madras High Court is the only decision on the issue and other decisions relied upon by the....
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....nd I am inclined to allow the exemption as per law within the ambit of Section 10(10C) and confirm the order of the CIT(A) in this regard. 9. In the result, the Revenue's appeal is dismissed. REFERENCE UNDER Section 255(4) OF THE IT ACT, 1961 21st Jan., 2009 There is a difference of opinion between the Members of the Bench on the following issue: That the CIT(A) erred in law in deleting the disallowance of the assessee's claim of exemption of Rs. 5,00,000 under Section 10(10C) on the ground that Hon'ble Madras High Court in their order dt. 12th March, 2008 made on similar issue has ordered that no deduction under Section 10(10C) is available to the employee if the schemes framed are not in accordance with the requirement of Rule 2BA of the IT Rules. The exemption of tax under Section 10(10C) is available on the amount received under a scheme of voluntary retirement/voluntary separation framed in accordance with the guidelines prescribed and specified in Rule 2BA and that the Bombay High Court in their order reported in CIT v. Chhajer Packaging & Plastics (P) Ltd. (2008) 214 CTR (Bom) 389 : (2008) 300 ITR 180 (Bom) decided that the monetary limit fixed administrati....
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....with the following observation: The issue of allowing the exemption under Section 10(10C) of the Act was examined by Hon'ble Tribunal of Mumbai and Chennai and had held the said exemption is allowable from out of the compensation received by the retired employees. The Hon'ble Tribunal, 'B' Bench of Kolkata in ITA Nos. 798/Kol/2006, 809/Kol/2006 and 810/Kol/2006, 813/Kol/2006 relating to the similar employee of the same bank has held that each of the assessee is entitled to get the exemption to the extent of Rs. 5 lakhs under Section 10(10C) of the Act. Respectfully following the decision of the jurisdictional Tribunal the claim of the exemption under Section 10(10C) of the Act allowed in this appeal. 3. Being aggrieved by the aforesaid order of CIT(A), the Revenue came in appeal before the Tribunal. The learned AM has proposed an order allowing the Revenue's appeal on the issue and rejected the assessee's claim beholding as under: 7. Before us the learned Departmental Representative had relied on the decision of the Hon'ble Madras High Court in the case of CIT v. M. Chelladurai and Ors. (2008) 5 DTR 201(Mad) , for the proposition that in the circums....
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.... behalf of the assessee-respondent. I have, therefore, heard the learned Departmental Representative and perused the material placed before me. I find that the issue has been considered by the Hon'ble jurisdictional High Court in the case of SAIL DSP VR Employees Association 1998 v. Union of India (supra) in which their Lordships held as under: Section 10(10C) of the IT Act, 1961, uses the expression 'any amount received by an employee at the time of his voluntary retirement in accordance with any scheme or schemes of voluntary retirement' if a plain literal interpretation of statutory provision produced a manifestly absurd and unjust result, which the legislature could not have intended, the Court is supposed to modify the language used by the legislature, even to do some violence to it so as to achieve the obvious intention of the legislature and produce a rational construction. An expression used in the statute is not always to be interpreted literally or grammatically. Sometimes it has to be interpreted having regard to the context in which the expression is used and having regard to the object and purpose for which the same is enacted. Section 10(10C) was inserte....
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....retirement. Thus their Lordships have held that the assessee, who opts for voluntary retirement, is not only entitled to exemption under Section 10(10C) but also rebate under Section 89 of the IT Act. Similar view is taken by the Hon'ble Karnataka High Court in the case of CIT v. P. Surendra Prabhu (supra) wherein their Lordships held as under: that the assessee, employee of the respondent-bank was not only entitled to the benefit of exemption under Section 10(10C) of the Act to the extent prescribed in the provision itself but for any amount over and above the prescribed limit under the aforesaid provision, the assessee was also entitled to relief under Section 89(1) of the Act r/w Rule 21A. 7. From the above it is evident that while the learned AM relied upon the decision of Hon'ble Madras High Court in the case of CIT v. M. Chelladurai and Ors. (2008) 5 DTR (Mad) 201, he has not taken into account the decisions of other High Courts including the jurisdictional High Court. The Hon'ble jurisdictional High Court under the identical facts held the assessee, i.e., the retired employee, to be entitled for deduction under Section 10(10C). Similar view is taken by Hon....