TMI Blog2006 (2) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... e BHEL VRS. The assessee claimed exemption under section 10(10C) of the Act for Rs.5,00,000 in these two years and offered the balance of sum more than Rs.5,00,000 in the return of income for the relevant assessment year i.e., 2001-02. On facts, first we will take the case of Shri V.G. Ramachandiron and the facts in the other case are exactly similar. Shri V.G. Ramachandiron, received a sum of Rs.3,24,881 from BHEL on retirement in August 1999 under voluntary retirement scheme introduced by BHEL Company. The assessee did not file any return of income for the financial year 1999-2000 relevant to assessment year 2000-01 as compensation received was below. Rs.5,00,000 and which was claimed as exempt under section 10(10C) of the Act. In the next year i.e., financial year 2000-01 relevant to assessment year 2001-02 received a further amount of Rs.2,01,281 as well as arrears of salary amounting to Rs.2,12,371. The assessee filed the return of income for assessment year 2001-02 and claimed exemption on an amount of Rs.2,01,281 under section 10(10C) in respect of compensation of VRS. The assessee made this claim on the ground that the total amount of Rs.5,00,000 eligible for exemption unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o by lending it a different meaning from what the words convey. The meaning of the second proviso is crystal clear. So is its scope. Exemption cannot be allowed thereunder in relation to any other assessment year. (Availment and allowance are one and the same thing, particularly if the former has not been questioned). I would, therefore, hold that the second proviso must be read in its letters and applied accordingly. If exemption has been availed under the said proviso for one assessment year, it cannot be availed for another assessment year whatever be the circumstances due to which full exemption could not be availed in the first assessment year. The proviso does not countenance any shifting or splitting of the maximum permissible amount of Rs.5 lakhs either. It is pertinent to mention here that even while clause (IOC) has since been amended by the Finance Act, 2003, so as to make it applicable not only to any amount "received" but also to any amount "receivable", the second proviso has not been altered in any manner; and, consequently, the stipulation therein continues to remain unchanged. This goes to show that irrespective of whether the amount "received" was the full amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee Shri G. Baskar who argued that, as per section 10(10C) any amount received or receivable by an employee, he specifically drew our attention to "or receivable" as inserted in sub-section (10C) of section 10, by the Finance Act, 2003 with effect from 1-4-2004. Further he drew our attention to section 17(3) which reads as under- ""Salary", "perquisite" and "profits in lieu of salary" defined. 17. For the purposes of sections 15 and 16 and of this section,- (1) ........... (2) ........... (3) "profits in lieu of salary" includes- (i) the amount of any compensation due to or received by an assessee from his employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto;" In view of these provisions he argued that amount of any compensation due to or received by an assessee is to be assessed in that very year only. Here he argued that the amount of Rs. 2,01,281 became due in the assessment year 2000-01. The ld. DR on the other hand simply relied on the second proviso to section 10(10C) of the Act and in view of that he argued that no exemption shall be allowed to assessee in relation to any other a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is receivable by the employee at the time of voluntary retirement according to the scheme and became chargeable to tax under clause (a) of section 15, even though not paid. Therefore, to the extent of rupees five lakhs, the said amount is exempted from being charged to tax by reason of section 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. An amount becomes chargeable once it is earned whether it is received or not. Since the employee was not in service, therefore, the deferred payment will not continue and it would not be a salary from service, neither a deferred payment of salary nor arrears payment of salary, since the scheme postulates an one time payment in consideration of voluntary retirement spread over to a period of ten years or till the age of 58 years, whichever is earlier, in quarterly payment in advance. It is a deferred payment of the benefit receivable under the voluntary retirement scheme. Therefore, it would not be a payment of salary outside the scope of section 10(10C). The characteristic cannot be changed because of stretching over the period of payment of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r receivable (i.e., even if received in instalments) by an employee on his voluntary retirement or termination of his service shall not be included in computing the total income of such employee." 8. Admittedly, the amount receivable in these cases is on account of compensation of voluntary retirement scheme which is well within the maximum permissible limit of Rs. 5,00,000 lakhs under section 10(10C) of the Act. The sum received under voluntary retirement scheme to the extent of Rs.5,00,000 are to be exempt under section 10(10C). Even if the payment is spread over a period of two years, since, it has been received from the same employer and the proviso to section 10(10C) does not spell out restriction on this account. This view has been clarified in the case law of Hon'ble Calcutta High Court cited above. Even otherwise, the payment of benefit arising at the time of retirement from the same employer and from the same scheme, the treatment of employees of the same organization coming out on voluntary retirement scheme without discriminating on the ground, receipt should have been received in full or to avail full limit of Rs.5,00,000 as prescribed under section 10(10C) is the int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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