TMI Blog2012 (9) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act and the Rules. He merely considered himself bound by the circular and construed the circular as directing him to hold the assessee ineligible for exemption under Section 10(10C) - thus the authorities shall decide the question of exemption under Section 10(10C) without being influenced by the impugned circular dated 6th October, 2009 in any manner whatsoever - in favour of assessee. - Writ Petition No. 1718 OF 2011 - - - Dated:- 17-8-2012 - S J Vazifdar And M S Sanklecha, JJ. For Appellant : Mr. J D Mistri, Sr. Adv i/by Mr. Mandar Vaidya For Respondent : Mr. Arvind Pinto JUDGEMENT Per : S J Vazifdar, J : The petitioner is a society registered under the Societies Registration Act. Its members are employees of the State Bank of India (SBI) who had opted to retire under the Voluntary Retirement Scheme (VRS) of the SBI. The 2nd respondent is the Union of India. 2) The petitioner has challenged a circular dated 6th October, 2009 issued by the 1st respondent. The petitioner has sought orders directing the Chief Commissioner/Officers to follow the orders of the Appellate Authorities holding that the VRS schemes are entitled to exemption under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005. Apparently, a notice under Section 148 was issued for reopening the assessment merely on the basis of a copy of the said scheme. The Tribunal held that the foundation of the reopening was wrong as the Assessing officer only relied upon the scheme instead of considering the provisions of the Act. On merits, the Tribunal held that the issue was covered in favour of the assessee by the Judgment of the Division Bench of this Court in Commissioner of Income Tax v. Koodathil Kallyatan Ambujakshan 309 ITR 113. The Tribunal therefore, held in favour of the Officer on merits as well as on the jurisdictional issue under Section 148. 6) A year later the 1st respondent issued the impugned circular dated 6th October, 2009 which reads as under: It has been observed that the State Bank of Patiala and State Bank of India are offering Exit Option Schemes to employees of various grades in the management of the bank. These schemes clearly lay out that they are not eligible for deduction under section 10(10C) of the Income Tax Act, 1961. Some employees who have availed of these schemes are nevertheless claiming exemption of the benefits received from such scheme u/s. 10(10C). The fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold the assessee ineligible for exemption under Section 10(10C). It is necessary to note that the Assessing officer had granted the benefit of Section 10(10C) to the assessee. The CIT(A) however, reviewed the order under Section 264. B) The said officer filed Writ Petition No.1051 of 2010 inter alia challenging the circular. He also sought an order directing that exemption under Section-10 (10C) be allowed. The Writ Petition was disposed of by a Division Bench of this Court in terms of the Minutes of Order dated 23rd August, 2010, the relevant part whereof reads as under: Rule. By consent of parties returnable forthwith. Respondents waive service of the Rule. 2 The impugned order u/s 264 of the Income Tax Act, 1961 dated 24.3.2010 (Ex.D to the petition) is hereby quashed and set aside. 3 The 1st respondent is directed to consider whether the petitioner is entitled to the exemption u/s.10 (10C) of the Income Tax Act, 1961 and the Rules made under the Income Tax Rules, 1962 within a period of 4 weeks from today and to pass an order afresh in accordance with law. 4 The petitioner shall be entitled to be heard and put forward such arguments and contentions as he req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udsman/grievances/SBI/2010- 11/143 dt.16/3/2011, it is clear that the assessee has claimed a wrong exemption leading to income of Rs.5,00,000/- escaping assessment. In this regard you are requested to show cause as to why the above mentioned income should not be taxed in the respective assessment year. 14) Mr. Mistri submitted that the impugned circular dated 6th October, 2009 is illegal, null and void. He submitted that the first respondent cannot by issuing circulars dictate the orders to be passed by the authorities under the Income Tax Act. Nor can it affect the provisions of the Act if they are otherwise applicable. He further submitted that the provisions of the said scheme purporting to state the position under the Act which we have set out earlier are not material to the determination of the assessee's eligibility to claim an exemption under Section 10(10C). The authorities must decide the question of eligibility on the basis of the provisions of the schemes and the provisions of the Act and the Rules made thereunder. 15) Although the submissions appear to be well founded, it is not necessary for us to decide the same in view of the statement made on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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