Sh. Bikram Jit Passi, Ambala Cantt. v. DCIT, Ambala

ITA 925/CHANDI/2011 | 2008-2009
Pronouncement Date: 09-11-2011 | Result: Allowed

Appeal Details

RSA Number 92521514 RSA 2011
Assessee PAN RTILL2002S
Bench Chandigarh
Appeal Number ITA 925/CHANDI/2011
Duration Of Justice 1 month(s) 19 day(s)
Appellant Sh. Bikram Jit Passi, Ambala Cantt.
Respondent DCIT, Ambala
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 09-11-2011
Assessment Year 2008-2009
Appeal Filed On 20-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA VICE PRESIDENT AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 925/CHD/2011 A.Y.: 2008-09 SHRI BIKRAM JIT PASSI V DCIT 84 KARAN PURI AMBALA CANTT. BEHIND B.D.FLOUR MILLS AMBALA CANTT. PAN: AAVPA-7460K (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI TEJ MOHAN SINGH DEPARTMENT BY: SMT. JAI SHREE SHARMA DATE OF HEARING : 01.11.2011 DATE OF PRONOUNCEMENT : 09.11.2011 ORDER PER MEHAR SINGH AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 14.07.2011 OF THE LD. CIT( A) PANCHKULA PASSED U/S 250(6) OF THE INCOME-TAX ACT 1 961 (IN SHORT HEREINAFTER REFERRED TO AS 'THE ACT') 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE WITHDRAWAL OF EXEMPTION OF RS.5 00 000/- CLAIMED UNDER SECTION 10(10C) OF THE ACT WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT THE LD. CIT(A) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THE EXIT OPTION SCHEME DOES NOT SATISFY THE CONDITIONS LAID UNDER SECTION 10(10C) READ WITH RULE 2BA WHICH IS 2 INCORRECT AND AS SUCH THE EXEMPTION WITHDRAWN AND UPHELD IS WHOLLY UNWARRANTED. 3. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS ARBITRARY OPPOSED TO LAW AND FACTS OF THE CASE AND IS THUS UNTENABLE. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASS ESSEE BIKRAM JIT PASSI FILED RETURN OF INCOME ON 11.08.2 008 FOR THE ASSESSMENT YEAR 2008-09. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSES SEE HAD CLAIMED EXEMPTION U/S 10(10C) OF THE ACT AMOUNTING TO RS.5 00 000/-. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE'S AS NOT BEING ELIGIBLE FOR EXEMPTION U/S 10(10C) OF THE ACT. 4. THE CIT(A) UPHELD THE ORDER OF THE AO. THE RELE VANT FINDINGS OF THE CIT(A) ARE AS UNDER : KEEPING IN VIEW THE CLEAR CONDITIONS IN THE SCHEME REGARDING FILLING UP OF VACANCIES CAUSED BY THE RELEASE OF OFFICERS AND THE CONFIRMATION BY THE BAN K AT POINT NO.10 ABOVE THAT THE SCHEME DOES NOT COMPLY WITH SECTION 10(10C) OF THE IT ACT AND IS NO T APPROVED BY INCOME TAX DEPARTMENT CONDITIONS NO. (III) & (IV) OF RULE 2BA ARE VIOLATED. THEREFORE T HE SCHEME IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(10C) OF THE IT ACT 1961. AS A RESULT THE ASSESSEES ARE NOT HELD ELIGIBLE FOR EXEMPTION U/S 10(10C) OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED AND CONSIDERED THE FACTS OF THE APPEAL. THE LD. 'A R' PLACED RELIANCE ON THE DECISION IN THE CASE OF PANDYA VI NOD CHANDRA BHOGILAE V ITO (2010) 045 DTR 105 ITAT AHMEDABAD TO STATE THAT THE FACT-SITUATION OF THE PRESENT 3 APPEAL IS SQUARELY COVERED BY THE DECISION. HAVING CONSIDERED THE DECISION WE FOUND THAT THE SAME IS APPLICABLE TO THE FACTS OF THE PRESENT CASES. THE RELEVANT AND OPERATIVE PART OF THE DECISION IS REPRODUCED HE REUNDER : 2. THUS THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ABOUT ALLOWABILITY OF EXEMPTION UNDER SECTION 10(10C) OF THE INCOME TAX ACT 1961. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A DEPUTY MANAGER IN SBI AND HAS TAKEN VRS ON 31-5-2006 UNDER EXIT OP TION SCHEME INTRODUCED BY THE BANK OF INDIA WITH EFFECT FROM 7-5- 2005. THE ASSESSEE RECEIVED SALARY AND PENSION AMOU NTING TO RS.3 81 894 (INCLUDING EXGRATIA). ON EXAMINATION OF FORM NO.16 THE ASSESSING OFFICER NOTICED THAT ASSESSEE R ECEIVED EXGRATIA OF RS.3 07 236 ON VRS. HE CLAIMED EXEMPTI ON UNDER SECTION 10(10C) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM BY FOLLOWING CIRCULAR NO. CHIEF CIT BARO DA LETTER BRD/CHIEF CIT/TECH/MICS/10(10C)/2009-10 DATED 17-6 - 2006. THE ASSESSEE RELIED ON THE DECISION OF TRIBU NAL KOLKATA IN THE CASE OF DY.CIT V. KRISHNA GOPAL SAHA (2009) 29 DTR (KOL)(TM)(TRIB) 385 BUT THE LEARNED ASSESSIN G OFFICER DID NOT AGREE AND MADE THE ADDITION. THE LE ARNED COMMISSIONER (APPEALS) ALSO CONFIRMED THE DISALLOWA NCE BY TRYING TO DISTINGUISH THE DECISION OF THIRD MEMBER IN DY.CIT V. KRISHNA GOPAL SAHAS CASE (SUPRA). 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE DISTINCTION CIT ED BY THE LEARNED COMMISSIONER (APPEALS) IS NOT SOUND AND DOE S NOT STAND TO REASON. THE ONLY BASIS FOR NOT ALLOWING T HE CLAIM HAS BEEN THAT SCHEME FOR VRS IS NOT IN ACCORDANCE W ITH RULE 2BA. HOWEVER IT HAS NOT BEEN POINTED OUT HOW THE EMPLOYER HAS NOT FRAMED THE SCHEME IN ACCORDANCE WITH RULE 2 BA. EARLIER TILL 2002 SCHEMES WERE REQUIRED TO BE APPRO VED BY THE CHIEF COMMISSIONER BUT THEREAFTER SUCH REQUIREMENT HAS BEEN DISPENSED WITH AND THEREFORE IT IS ONLY FOR THE E MPLOYER TO FRAME THE SCHEME FOR VRS OR FOR EARLIER EXIT OPTION . IF 4 ASSESSING OFFICER HAD ANY DOUBT ABOUT THE SCHEME HE COULD HAVE ENQUIRED FROM THE EMPLOYER. SO FAR AS THE ASS ESSEE EMPLOYEE IS CONCERNED HE CANNOT BE PENALIZED AND T AX WILL BE LEVIED ON HIM ON THE ASSUMPTION THAT THE SCHEME FRAMED BY EMPLOYER IS NOT IN ACCORDANCE WITH RULE 2BA. IN AN Y CASE THE JUDGMENT OF THIRD MEMBER IN DY.CIT V. KRISHNA G OPAL SAHA (SUPRA) IS CLEARLY APPLICABLE AND WE DO NOT FI ND ANY REASON TO TAKE A DIFFERENT VIEW. FOR THE SAKE OF C ONVENIENCE WE REFER TO FOLLOWING PARA FROM THE THIRD MEMBER JU DGMENT IN DY.CIT V. KRISHNA GOPAL SAHAS CASE (SUPRA) AS UN DER : 5. AT THE TIME OF HEARING BEFORE ME NONE APPEARED ON BEHALF OF THE ASSESSEE-RESPONDENT. I HAVE THEREFORE HEARD THE LEARNED DEPARTMENT REPRESENTATIVE AND PERUSED THE MATERIAL PLACED BEFORE ME. I FIND THAT THE ISSUE HAS BEEN CONSIDER ED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SA IL DSP VR EMPLOYEES ASSOCIATION 1998 V. UNION OF INDIA (SUPRA ) IN WHICH THEIR LORDSHIPS HELD AS UNDER : SECTION 10(10C) OF THE INCOME TAX ACT 1961 USES T HE 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 LITERA L INTERPRETATION OF STATUTORY PROVISION PRODUCED A MA NIFESTLY ABSURD AND UNJUST RESULT WHICH THE LEGISLATURE COU LD NOT HAVE INTENDED THE COURT IS SUPPOSED TO MODIFY THE LANGU AGE USED BY THE LEGISLATURE EVEN TO DO SOME VIOLENCE TO IT S O AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AN D PRODUCE A RATIONAL CONSTRUCTION. AN EXPRESSION USED IN THE S TATUTE IS NOT ALWAYS TO BE INTERPRETED LITERALLY OR GRAMMATIC ALLY. 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 ENACTE D. SEC.10(10C) WAS INSERTED IN ORDER TO MAKE VOLUNTARY RETIREMENT ATTRACTIVE SO AS TO REDUCE HUMAN COMPLEM ENTS FOR SECURING ECONOMIC VIABILITY OF CERTAIN COMPANIES. THIS OBJECT WAS ELABORATED BY VARIOUS DEPARTMENTAL CIRCU LARS AND EXPLANATORY STATEMENTS ISSUED FROM TIME TO TIME. S IMILARLY RULE 2BA OF THE INCOME TAX RULES 1962 WHICH WAS I NSERTED 5 BY IT (SIXTEENTH AMENDMENT) RULES 1962 WAS AMENDE D FROM TIME TO TIME. ALL THESE GO TO SHOW THAT THIS WAS I NTENDED TO MAKE VOLUNTARY RETIREMENT MORE ATTRACTIVE AND BENEF ICIAL TO THE EMPLOYEE OPTING FOR VOLUNTARY RETIREMENT. THER EFORE THIS HAS TO BE INTERPRETED IN A MANNER BENEFICIAL TO THE OPTEE FOR VOLUNTARY RETIREMENT IF THERE IS ANY AMBIGUITY. SUMS PAID ON VOLUNTARY RETIREMENT TO THE EXTENT OF RUPEES FIVE LAKHS ARE EXEMPTED FROM BEING CHARGED TO TAX B Y REASON OF SECTION 10(10C). EVEN IF THE PAYMENT IS STRETCH ED OVER A PERIOD OF YEARS THE SAME WOULD NOT BECOME CHARGEAB LE TO TAX IN ANY SUBSEQUENT ASSESSMENT YEAR. FROM THE ABOVE IT IS EVIDENT THAT THEIR LORDSHIPS O F THE JURISDICTIONAL HIGH COURT HELD THAT AN EMPLOYEE WH O TAKES VOLUNTARY RETIREMENT IS ENTITLED TO DEDUCTION UNDE R SECTION 10(10C) EVEN IF THE PAYMENT IS STRETCHED OVER A PER IOD OF YEARS. THEY HAVE ALSO HELD THAT PROVISION OF SECTI ON 10(10C) SHOULD BE INTERPRETED IN A MANNER BENEFICIAL TO THE OPTEE FOR VOLUNTARY RETIREMENT. IT MAY BE POINTED OUT THAT I N THE ABOVE-MENTIONED CASE THE EMPLOYER I.E. SAIL WAS OF THE OPINION THAT THE EMPLOYEES WERE NOT ENTITLED TO EXE MPTION UNDER SECTION 10(10C) AND ACCORDINGLY SAIL HAD BEE N DEDUCTING TAX AT SOURCE ON THE AMOUNT PAID UNDER TH EIR VOLUNTARY RETIREMENT SCHEME. THE FACTS ARE SIMILAR IN THE ASSESSES CASE BECAUSE IN THE CASE OF THE ASSESSEE ALSO THE EMPLOYER BELIEVING THAT THE ASSESSEE IS NOT ENTITLE D TO DEDUCTION UNDER SECTION 10(10C) HAS DEDUCTED TAX AT SOURCE ON THE AMOUNT PAID ON VOLUNTARY RETIREMENT. THE FA CTS BEING IDENTICAL THE ABOVE DECISION OF HON'BLE JURISDICTI ONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE UNDE R APPEAL BEFORE THE TRIBUNAL. 6. SIMILARLY HON'BLE BOMBAY HIGH COURT IN THE CAS E OF CIT V. NAGESH DEVIDAS KULKARNI (SUPRA) HELD AS UNDE R : THE ASSESSEE IS ENTITLED TO THE EXEMPTION UNDER SEC TION 10(10C) OF THE ACT AND ALSO REBATE UNDER SECTION 89 OF THE ACT IN RESPECT OF THE AMOUNT RECEIVED IN EXCESS OF RS.5 00 000 ON ACCOUNT OF VOLUNTARY RETIREMENT. 6 THUS THEIR LORDSHIPS HAVE HELD THAT THE ASSESSEE W HO OPTS FOR VOLUNTARY RETIREMENT IS NOT ONLY ENTITLED TO E XEMPTION UNDER SECTION 10(10C) BUT ALSO REBATE UNDER SECTION 89 OF THE INCOME TAX ACT. SIMILAR VIEW IS TAKEN BY THE HON'B LE KARNATAKA HIGH COURT IN THE CASE OF CIT V. P. SUREN DRA PRABHU (SUPRA) WHEREIN THEIR LORDSHIPS HELD AS UNDE R : 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 PRESCR IBED LIMIT; UNDER THE AFORESAID PROVISION THE ASSESSEE WAS ALS O ENTITLED TO RELIEF UNDER SECTION 89(1) OF THE ACT READ WITH RULE 21A. 6. FROM THE ABOVE IT IS EVIDENT THAT WHILE THE L EARNED AM RELIED UPON THE DECISION OF HON'BLE MADRAS HIGH COURT IN T HE CASE OF CIT V. M.CHELLADURAI & ORS. (2009) 317 ITR 370(M AD) : (2009) 176 TAXMAN 31 HE HAS NOT TAKEN INTO ACCOUNT THE DECISIONS OF OTHER HIGH COURTS INCLUDING THE JURISD ICTIONAL HIGH COURT. THE HON'BLE JURISDICTIONAL HIGH COURT UNDER THE IDENTICAL FACTS HELD THE ASSESSEE I.E. THE RETIRE D EMPLOYEE TO BE ENTITLED TO DEDUCTION UNDER SECTION 10(10C). SI MILAR VIEW IS TAKEN BY HON'BLE BOMBAY AS WELL AS KARNATAKA HIG H COURTS. THE DECISION OF HON'BLE JURISDICTIONAL HIG H COURT IS BINDING UPON US AND MOREOVER IF TWO VIEWS ARE POSSI BLE WHILE INTERPRETING THE PROVISION A VIEW WHICH IS F AVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED. HON'BLE JURISD ICTIONAL HIGH COURT IN THE ABOVE-REFERRED CASE OF SAIL DSP V R EMPLOYEES ASSOCIATION 1998 V. UNION OF INDIA (SUPRA ) HAS ALSO HELD THAT THE PROVISIONS OF SECTION 10(10C) AR E TO BE INTERPRETED LIBERALLY IN A MANNER WHICH IS BENEFICI AL TO RETIRED EMPLOYEES IN VIEW OF THE ABOVE. I RESPECTF ULLY FOLLOWING THE DECISIONS OF HON'BLE JURISDICTIONAL H IGH COURT BOMBAY HIGH COURT AND KARNATAKA HIGH COURT AGREE WI TH THE LEARNED JM AND HOLD THAT THE ASSESSEE IS ENTITLED T O EXEMPTION UNDER SECTION 10(10C) TO THE EXTENT OF RS.5 LAKHS. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL WE ALLOW THE CLAIM OF ASSESSEE. 7 6. THE ISSUE IN QUESTION IS COVERED BY THE DECISION OF THE HON'BLE TRIBUNAL AS REPRODUCED ABOVE. THE ASSESSEE/APPELLANT WAS ALSO EMPLOYED IN THE STATE B ANK OF INDIA. RESPECTFULLY FOLLOWING THE SAID DECISION TH E APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH NOV. 2011. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: ..NOV. 2011 POONAM COPY TO: THE APPELLANT THE RESPONDENT THE CIT(A) THE CIT DR ASSISTANT REGISTRAR ITAT CHANDIGARH