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2014 (12) TMI 8 - ITAT PUNEEntitlement for claim of exemption u/s 10(10C) - Voluntary Retirement Scheme - Whether all these assessees are entitled for claim of exemption u/s 10(10C) on the compensation/monetary benefits received by them for opting to retire from service under Voluntary Retirement Scheme (VRS), 2000 framed by their company – Held that:- The first condition is that the VRS should be applied to the employee who has completed minimum 10 years of service or completed 40 years of age - as per the VRS Scheme first condition is fulfilled - except the Directors of the company or the Co-operative Society, scheme should be applicable to all class of the employees including workers and executives of the company - the logic of the CIT(A) itself is not correct that as the company has applied the scheme to only certain class of the employees hence, the condition of Clause-(ii) of Rule 2BA is not fulfilled - Nothing has been brought on record also by the CIT(A) before making such observations at least calling the data from the company whether in fact there was no overall reduction in the employees/workmen in the company. Relying upon COMMISSIONER OF INCOME-TAX Versus KOODATHIL KALLYATAN AMBUJAKSHAN [2008 (7) TMI 259 - BOMBAY HIGH COURT] - Rule 2BA laid down the guidelines for the purpose of Sec. 10(10C) of the Act but the Rule, will have to be read borne in mind the object of Sec. 10(10C) itself - the term “overall” is a general in nature but from the said term no interference can be made that irrespective of the fact whether there is a surplus employees are not the employer must reduce the workers or employees in all the Sections and Departments of his undertaking - the scheme was initiated for the economic survival of the company and reduction in the cost - the condition in Clause-(ii) is also fulfilled - there is overall reduction in the existing strength of the employees of the company which is discussed while deciding Condition No.-(ii) of Rule 2BA - The next condition is that the employer company should not fill up the vacancies caused by the VRS - it was claimed before the AO that after declaring the VRS subsequently the company was closed down and to that effect an affidavit is also filed before us - once the assessee stated that he has not been employed in any company under the management of his employer company then burden is on the revenue to bring on record evidence to show contrary that such undertaking is not correct. There is a maximum ceiling of ₹ 5,00,000/- on the monetary benefits/compensation to be paid to the worker/employee - apart from that as per Sec. 10(10C), the maximum amount eligible for exemption is to extend of ₹ 5,00,000/- and as per VRS Scheme, there is ceiling on monetary benefit to be given to employee which is maximum ₹ 5,00,000 - the employee has to make the investment of the amount received under the VRS whereby the maximum tax rebate is applicable - The benefit in the nature of the tax incentive was given whereby the maximum employees may opt for the VRS and at the same time the economic viability of the industries can be sustained - all the conditions of Rule 2BA are fulfilled in the VRS Scheme framed by the employer company i.e. Kirloskar Copeland Ltd. and both the authorities below are not justified in denying the benefit of exemption to these employees – thus, the AO is directed to allow the exemption to all these assessees u/s. 10(10C) of the Act – Decided in favour of assessee.
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