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2007 (3) TMI 293 - AT - Income TaxExemption u/s 10(10C) - Consideration received by the employees who opted for "Optional Early Retirement Scheme" (OERS) - employees of other public sector banks which introduced Voluntary Retirement Scheme (VRS) for the benefit of the employees - exemption upto Rs.5 lacs - relief u/s 89 - HELD THAT:- The records produced before us does not show that the vacancies as a result of OERS has been filed by the bank. As the bank itself in its Annual Report states that there has been considerable reduction in staff strength as the result of the options exercised under the OERS, we do not accept the contention of the department that the relief to the employees be denied on the ground that the bank has not given any undertaking that the vacancy will not be filled up and it is also not the specific requirement of the guidelines. We have read the entire scheme and do not find any obligation on the part of the RBI the employer, to show any alternative opportunities to the persons who have opted under the OERS. In other words, no evidence or material has been brought before us to show that there has been an obligation on the part of the RBI to employ the retiring employees in any other company or concerns under the same management. We, therefore, on the basis of the scheme and the actual facts that are brought out by the bank itself, do not agree with the stand of the Assessing Officer or the CIT(A) that the conditions or the guidelines prescribed under rule 2BA are not complied in the OERS of the RBI. Any statement that it will not fill up the vacancies caused as a result of OERS would have resulted in opposition by the employees themselves as it will be a repressive measure against the labour. The sums in question are clearly the part of salary in the form of profits in lieu of salary as defined in section 17(3) of the Act. These are amount of compensation received by the employee from the employer in connections with the terms of employment and, therefore, the assessees in question are clearly entitled for relief under section 89 in accordance with law in respect of the payments that are included in the total income. Further a similar view has been expressed in the decision of the Hon'ble Madras High Court in the case of CIT v. G.V. Venugopal [2004 (12) TMI 35 - MADRAS HIGH COURT] and the decision of the Hon'ble Karnataka High Court in CIT v. P. Surendra Prabhu [2005 (9) TMI 67 - KARNATAKA HIGH COURT]. The orders of the CIT(A) in granting relief u/s 89 cannot be therefore found fault with. As a result, we hold- (a) that the assessees in question are entitled for relief u/s 10(10C) of the Income-tax Act in respect of the sums received under the OERS up to a sum of Rs. 5 lakhs. (b) the assessees are also entitled to relief u/s 89 of the Act in respect of the sums which are in excess of the exemption granted. In the result, the appeals filed by the assessee are treated as allowed and those filed by the department are dismissed on the lines discussed above.
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