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2009 (7) TMI 173 - AT - Income TaxThird Member Appointment - difference of opinion between the ld AM and ld JM - disallowance on claim of exemption u/s. 10(10C) - scheme of voluntary retirement voluntary separation framed in accordance with the guidelines prescribed and specified in r. 2BA - Assessee is a retired employee of Standard Chartered Grindlays Bank.During - the assessee had exercised the option for retirement under the scheme floated by the bank known as "Early Separation Plan" (ESP) and received compensation from his employer-bank. No deduction u/s. 10(10C) had been allowed in the TDS certificate in Form No. 16 issued by the said bank. Return of income was filed by the assessee claiming exemption of Rs. 5,00,000 u/s. 10(10C) which was processed u/s. 143(1). The assessment was reopened u/s. 147 and the claim of exemption u/s. 10(10C) made by the assessee was rejected by the AO. CIT(A), allowed the claim of the assessee. HELD THAT:- From the judgment of the Hon'ble Madras High Court in the case of M. Chelladurai & Ors.[2008 (2) TMI 420 - MADRAS HIGH COURT], it is abundantly clear that the issue involved gives rise to a substantial question of law. The facts of the present case are similar to that as considered by the Hon'ble Madras High Court in the above case. No decision of any other High Court on the impugned issue has been brought to our notice. In this view of the matter, we are of the considered opinion that we are required to follow the judgment of the Hon'ble Madras High Court in deciding the impugned issue. Accordingly, we hold that the assessee was not entitled to deduction under s. 10(10C) of the Act." The issue has been considered by the Hon'ble jurisdictional High Court in the case of SAIL DSP VR Employees Association 1998 vs. Union of India [2003 (2) TMI 46 - CALCUTTA HIGH COURT] in which their Lordships held as under: ''This object was elaborated by various Departmental circulars and explanatory statements issued from time to time. Similarly, r. 2BA of the IT Rules, 1962, which was inserted by the IT (Sixteenth Amendment) Rules, 1992, was amended from time to time. All these go to show that this was intended to make voluntary retirement more attractive and beneficial to the employee opting for voluntary retirement. Therefore, 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 by reason of s. 10(10C). Even if the payment is stretched over a period of years, the same would not become chargeable to tax in any subsequent assessment year." Similarly, Hon'ble Bombay High Court in the case of CIT vs. Nagesh Devidas Kulkarni [2007 (4) TMI 205 - BOMBAY HIGH COURT] held as under: "The assessee is entitled to the exemption u/s. 10(10C) and also rebate u/s. 89 in respect of the amount received in excess of Rs. 5,00,000 on account of voluntary retirement." Thus their Lordships have held that the assessee, who opts for voluntary retirement, is not only entitled to exemption u/s. 10(10C) but also rebate u/s. 89. Similar view is taken by the Hon'ble Karnataka High Court in the case of CIT vs. P. Surendra Prabhu [2005 (9) TMI 67 - KARNATAKA HIGH COURT] wherein their Lordships held as under: "that the assessee, employee of the respondent-bank was not only entitled to the benefit of exemption u/s. 10(10C) 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 u/s. 89(1) r/w r. 21A." 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 us. M. Chelladurai & Ors. 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 u/s. 10(10C). Similar view is taken by Hon'ble Bombay as well as Karnataka High Courts. The decision of Hon'ble jurisdictional High Court is binding upon us and moreover if two views are possible while interpreting the provision, a view which is favourable to the assessee has to be adopted. Hon'ble jurisdictional High Court in the above-referred case of SAIL DSP VR Employees Association 1998 vs. Union of India has also held that the provisions of s. 10(10C) are to be interpreted liberally in a manner which is beneficial to retired employees. In view of the above, I respectfully following the decisions of Hon'ble jurisdictional High Court, Bombay High Court and Karnataka High Court agree with the ld JM and hold that the assessee is entitled to exemption u/s. 10(10C) to the extent of Rs. 5 lakhs.
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