Maruti Somappa Gheji, v. ITO,

ITA 578/PUN/2010 | 2007-2008
Pronouncement Date: 28-09-2010 | Result: Allowed

Appeal Details

RSA Number 57824514 RSA 2010
Assessee PAN ABIPG7712L
Bench Pune
Appeal Number ITA 578/PUN/2010
Duration Of Justice 4 day(s)
Appellant Maruti Somappa Gheji,
Respondent ITO,
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 28-09-2010
Assessment Year 2007-2008
Appeal Filed On 24-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE SINGLE MEMBER CASE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBE R I.T.A. NO. 578/PN/2010 : A.Y. 2007-08 MARUTI SOMAPPA GHEJI 3 ATHARVA APARTMENT OPP. RAVIKIRAN DAIRY KHANBHAG SANGLI PAN ABIPG 7712 L : APPELLANT VS. I.T.O. WARD 1(3) SANGLI : RESPONDENT APPELLANT BY : NONE RESPONDENT BY: SHRI HEMANTKUMAR C. LEUVA ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) KOLHAPUR DATED 5-1-2009 O N THE POINT OF EXEMPTION U/S 10(10C) OF THE ACT. 2. WE FIND THAT THE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. KOODATHIL KALLYATAN AMBUJAKSHAN (20 09) 309 ITR 113 WHEREIN THE AMOUNT RECEIVED UNDER OPTIO NAL EARLY RETIREMENT SCHEME WHICH IS FLOATED BY RBI WA S HELD TO BE APPLICABLE TO ALL THE EMPLOYEES WHO HAVE SERVED FOR 25 YEARS AND HAD ATTAINED THE AGE OF 50 YEARS. IT WAS AIMED AT REDUCTION IN THE EXISTING STRENGTH OF EMPLOYEES AND VACANCIES CAUSED WERE NOT FILLED UP. THE ITA NO. 578/PN/10 MARUTI SOMAPPA GHEJI A.Y. 2007-08 2 QUESTION OF EMPLOYING RETIRED EMPLOYEES WITH ANOTHE R CONCERN OF SAME MANAGEMENT DID NOT ARISE AS RBI HAD NONE. IN THIS BACKGROUND IT WAS HELD AS UNDER: FIRSTLY THE OERS SATISFIES THE FIRST TEST OF R. 2BA NAMELY 10 YEARS OF SERVICE AND 40 YEARS OF AGE. IN THE INSTANT CASE IT IS 25 YEARS OF SERVICE AND 50 YEARS OF AGE. SECONDLY IT APPLIES TO ALL EMPLOYEES. THIS MEETS THE SECOND REQUIREMENT. THE THIRD REQUIREMENT IS THAT THE SCHEME HAS BEEN DRAWN TO RESULT IN OVERALL REDUCTION IN THE EXISTING STRENGTH OF THE EMPLOYEES. THIS HAS NOT BEEN EXPRESSLY STATED IN THE SCHEME. HOWEVER THE OBJECT BEHIND S. 10(10C) AND THE NOTE PUT UP BEFORE THE GOVERNOR AT THE TIME WHEN THE SCHEME WAS FRAMED HAS TO NOTED. THE MATERIAL ON RECORD WOULD INDICATE THAT THE EMPLOYEES HAD BEEN RENDERED SURPLUS ON ACCOUNT OF VARIOUS STEPS TAKEN BY THE EMPLOYER. THE SCHEME THEREFORE WAS MEANT FOR AN OVERALL REDUCTION IN THE EXISTING STRENGTH OF THE EMPLOYEES. THE THIRD REQUIREMENT IS ALSO THEREFORE SATISFIED. THE FOURTH REQUIREMENT WAS THE VACANCY CAUSED BY THE VOLUNTARY RETIREMENT OR VOLUNTARY SEPARATION IS NOT TO BE FILLED UP. A FINDING OF FACT HAS BEEN RECORDED BY THE TRIBUNAL ON THAT COUNT WHICH IS NOT CHALLENGED IN TERMS OF THE QUESTIONS OF LAW AS FRAMED BY THE REVENUE. SECONDLY THERE WAS MATERIAL ON RECORD WHICH SHOWS THAT THE SCHEME BASICALLY WAS TO REDUCE THE EMPLOYEE STRENGTH AS POSTS HAD BECOME SURPLUS ON ACCOUNT OF REORGANIZATION. ONE CANNOT FILL IN THE POSTS WHICH HAVE BECOME SURPLUS AS THE POSTS HAVE BECOME REDUNDANT. ALSO ADDITIONAL EVIDENCE TAKEN ON RECORD UNDER S. 260A(7) WOULD SHOW THAT NONE OF THESE POSTS FROM THE DAY THE SCHEME CAME INTO FORCE TILL 2008 HAVE BEEN FILLED IN. IN OTHER WORDS THE FOURTH REQUIREMENT HAS ALSO BEEN SATISFIED. INSOFAR AS THE FIFTH REQUIREMENT IS CONCERNED THE TRIBUNAL HAS ALREADY ANSWERED THE ISSUE AND THAT FINDING OF FACT IS NOT IN ISSUE. EVEN OTHERWISE CONSIDERING THAT THE RBI IS A STATUTORY BODY CREATED UNDER AN ACT THERE IS NO OTHER COMPANY OR CONCERN BELONGING TO THE SAME MANAGEMENT. THE FIFTH REQUIREMENT HAS ALSO BEEN SATISFIED. THE SIXTH REQUIREMENT HAS ALSO BEEN SATISFIED AS IN THE INSTANT CASE WHAT IS ITA NO. 578/PN/10 MARUTI SOMAPPA GHEJI A.Y. 2007-08 3 OFFERED IS TWO MONTHS SALARY FOR EACH COMPLETED YEAR OF SERVICE. THUS THE SCHEME EXPRESSLY OR IMPLIEDLY SATISFIED ALL THE REQUIREMENTS OF THE SECTION AS WELL AS THE GUIDELINES FRAMED FOR THE PURPOSE OF S. 10(10C) NAMELY R. 2BA. THE CBDT CIRCULAR DT. 26TH SEPT. OCT. 2005 TOOK NOTE OF THE LETTER WRITTEN BY THE RBI. THAT LETTER BY ITSELF WOULD NOT BE OF MUCH CONSEQUENCES AS THE OERS ITSELF NOTES THAT INCOME-TAX IF ANY WOULD BE PAYABLE BY THE EMPLOYEE. EVEN IN THE NOTE PUT UP BY THE DEPARTMENT FOR INTRODUCTION OF THE SCHEME FOR CONSIDERATION OF THE GOVERNOR IT WAS MADE CLEAR THAT IF ANY INCOME-TAX IS PAYABLE THAT WILL BE PAID BY THE EMPLOYEE AND IT WAS FURTHER MADE CLEAR THAT THE PAYMENT IS SUBJECT TO PROVISIONS OF S. 10(10C). THE LETTER THEREFORE BY RBI BY ITSELF WOULD NOT BE DETERMINATIVE AS TO WHETHER THE INCOME IS LIABLE TO TAX. ONE HAS TO SEE THE SCHEME FRAMED IN TERMS OF S. 10(10C) AND WHETHER IT SATISFIES THE GUIDELINES IN TERMS OF R. 2BA. THE COURT IS NOT PRECLUDED TO CONSIDER THE ISSUE IRRESPECTIVE OF THE CBDT CIRCULAR. ON EXAMINATION OF THE ISSUE IT WOULD BE CLEAR THAT THE GUIDELINES HAVE TO BE READ IN CONFORMITY WITH THE STATUTORY PROVISIONS. ON THE FACTS IN THE INSTANT CASE THE TRIBUNAL HAS RECORDED A FINDING THAT THE PREDICATES OF THE RULE HAVE BEEN SATISFIED. ON A PROPER CONSTRUCTION OF THE RULES THAT THE SCHEME ITSELF MAY NOT EXPRESSLY STATE ALL THE TERMS AS IT IS POSSIBLE FOR THE COURT TO READ THE IMPLIED TERMS OF THE SCHEME. IN THE INSTANT CASE THEY HAVE BEEN SO READ.-CIT VS. HERO CYCLES (P) LTD. (1997) 142 CTR (SC) 122 : (1997) 228 ITR 463 (SC) UCO BANK VS. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC) CST VS. INDRA INDUSTRIES (2001) 168 CTR (SC) 50 : (2001) 248 ITR 338 (SC) AND CIT VS. GWALIOR RAYON SILK MILL MFG. CO. LTD. (1992) 104 CTR (SC) 243 3. THE LEARNED AR FOR THE ASSESSEE HAS SUBMITTED TH AT THE FACTS IN THE CASE OF KOODATHIL KALLYATAN AMBUJA KSHAN (SUPRA) ARE EXACTLY SIMILAR TO THE FACTS OF THE PRE SENT CASE WITH AN EXCEPTION THAT THE SAME IS WITH REGARDS TO SBI ITA NO. 578/PN/10 MARUTI SOMAPPA GHEJI A.Y. 2007-08 4 EMPLOYEES. NOTHING CONTRARY WAS BROUGHT ON RECORD ON BEHALF OF THE LEARNED DR BEFORE US. 4. FACTS BEING SIMILAR SO FOLLOWING THE SAME REASONING I AM NOT INCLINED TO CONCUR WITH THE FIN DINGS OF THE CIT(A). IN THE FACTS AND CIRCUMSTANCES I FIND THAT THE OPTIONAL EARLY RETIREMENT SCHEME OF SBI ALSO SA TISFIED THE CONDITIONS OF RULE 2BA. ACCORDINGLY I HOLD TH AT THE RECEIPTS THEREUNDER WERE ELIGIBLE FOR EXEMPTION U/S 10(10C) OF THE ACT. 5. IN THE RESULT THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2010 . SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 28 TH SEPTEMBER 2010 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT- KOLHAPUR (4) CIT(A)- KOLHAUR (5) THE D.R. ITAT PUNE BENCH PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE ITA NO. 578/PN/10 MARUTI SOMAPPA GHEJI A.Y. 2007-08 5