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TMI Blog2005 (2) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... ome was first processed under section 143(1) of the I.T. Act. Subsequently the Assessing Officer observed that the assessee sought voluntary retirement from the bank and assessee was paid ex gratia amount of Rs. 8,04,904 at the time of retirement. The assessee claimed relief under section 89(1) in respect of ex gratia payment by filing Form No. 10E which is relevant for claiming relief under section 89(1) read with section 21A of the IT Act. The Assessing Officer considered that annexure-3 of the Form 10E in which spread over of ex gratia payment is claimed for three years is applicable for receipts pertaining to compensation which is covered under rule 21A(1)(a). The Assessing Officer came to the conclusion that the assessee's claim of deduction under section 89(1) in the return of income was not correct and there was escapement of income within the meaning of section 147/148 of the I.T. Act. The Assessing Officer therefore issued notice under section 148 requiring the assessee to file the return of income under section 148 of the I.T. Act. 3. In response to notice under section 143(2), it was claimed by the assessee's Counsel before the Assessing Officer that assessee is entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uite independent from each other and there is no overlapping in this regard. In view of the foregoing discussion, the Assessing Officer is directed to allow the claim of the appellant for relief under section 89(1) on the amount received under the Voluntary Retirement Scheme as reduced by exemption under section 10(10C)." 5. The department felt aggrieved and carried the matter before the Tribunal. The department has raised only one ground of appeal as mentioned in the preceding para. 6. It is argued by the learned D.R. that the assessee cannot claim exemption under section 10(10C) of the IT Act as well deduction under section 89(1) of the IT Act. The deduction under these two sections cannot be enjoyed simultaneously. According to learned D.R. exemption under section 10(10C) will be admissible only when compensation is less than Rs. 5 lakhs. If the compensation is more than Rs. 5 lakhs then exemption under section 10(10C) will not be admissible and only relief under section 89 will be admissible. According to learned D.R. the words 'to the extent' in section 10(10C) means that if the compensation does not exceed Rs. 5 lakhs then only exemption under section 10(10C) will be admiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as subsequently clarified certain issues arising out of Instruction No. 1979 by Instruction No. 1985 dated 29th June, 2000. Under this instruction the monetary limit in the context of 'each case taken singly' would mean each assessment year for each assessee considered at one point of time. The clarification issued by the Board reads as under: "1. The monetary limits in the context of 'each case taken singly' would mean each assessment year for each assessee considered at one point of time. For example, if filing of appeals were to be considered in the case of XYZ Limited for assessment years 1995-96 and 1996-97, the monetary limit as prescribed in Instruction No. 1979 would apply taking together the assessment years 1995-96 and 1996-97. 2. Even if the issues involved in an appeal under consideration are already pending in appeal before the appellate authorities, all subsequent appeals will now be filed for particular assessment year only as indicated in (i) above, if the tax effect exceeds the prescribed monetary limit." 10. It is clear from the Board's Instruction No. 1985 that each case of the assessee has to be considered independently on similar issue and case of all the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 89(1) of the IT. Act. The Hon'ble Madras High Court considered the provisions of section 89(1) of the IT. Act and 17(3)(i)(ii) of the I.T. Act and after considering these two provisions, the Hon'ble Madras High Court held as under: "The other portions of section 80 are not relevant for our purpose. The question as to whether the assessee is entitled to the relief under section 89(1) would depend upon the interpretation to be placed on the words 'termination of his employment' occurring in sub-section 3(i) of section 17 of the Act. It is necessary to bear in mind that termination of service can take place either by resignation or by dismissal or by compulsory retirement or on attaining superannuation That being so, we are of the view that there is no justification to confine the meaning of the word 'termination' only to the case of either voluntary retirement or superannuation, as per the stand taken by the department. It must be borne in mind that section 89(1) read with section 17(3) of the Act are beneficial clauses intended to grant certain benefits to employees or persons in service. Therefore, while placing interpretation on such clauses, the object with which such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 5,00,000 under section 10(10C) of the I.T. Act and also entitled to relief under section 89(1) of the I.T. Act. The provisions of section 89(1) are reproduced below for the sake of convenience: "Where an assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance or is in receipt, in any one financial year, of salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family pension as defined in the Explanation to clause (iia) of section 57, being paid in arrears, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, the Assessing Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed." 15. There is no dispute about the fact that ex gratia payment received by the assessee at the time of retirement is in the nature of profit in lieu of salary. There is no dispute about the fact that the assessee is also entitled to exemption under section 10(10C) of the I.T. Act in respect of ex gratia payment received by the assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceed Rs. 5,00,000, is without merit. 17. Now the question is whether the assessee is entitled to relief under section 89(1) of the I.T. Act on the balance amount after allowing exemption of Rs. 5,00,000 under section 10(10C). For instance in the case of Shri Chandra Kant S. Dharma, after allowing deduction of Rs. 5,00,000 out of the total amount of Rs. 8,04,904 whether the assessee is entitled exemption for balance amount of Rs. 3,04,904. According to learned D.R. the exemption under section 10(10C) and relief under section 89(1) cannot be allowed simultaneously but there is no such provision in the Act which restrict the assessee's claim of relief under section 89(1) on the balance amount after allowing exemption under section 10(10C) of the I.T. Act. In the case of CIT v. J. Visalakshi [1994] 206 ITR 531 it was held by Hon'ble Madras High Court that the object of section 89(1) is to grant certain benefit to the person whose services are terminated. The provisions of section 10(10C) and section 89(1) are independent and if exemption under section 10(10C) is admissible up to Rs. 5,00,000 then an assessee is also entitled to relief under section 89(1) on the balance amount becau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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