TMI Blog2006 (5) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the all assessees took voluntary retirement under the Voluntary Retirement Scheme (VRS) offered by the employer. The VRS was offered under a Special Scheme of VRS framed in accordance with the guidelines prescribed and approved by the Competent Authority. The assessees received amount under the special VRS package over and above the regular retirement benefits. The assessees claimed exemption under section 10(10C) of the Income-tax Act, 1961 on the said VRS amount. The assessee claimed, on taxable portion of the component, relief in the return of income under section 89(1). The Assessing Officer declined the relief under section 89(1) of the Act to the assessees on the following grounds : "( a )that rule 21A does not envisage compensa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94] 206 ITR 531 2 , wherein their Lordships have held that the amounts received by the employee at the time of voluntary retirement would be regarded as salary and relief under section 89(1) of the Act would be admissible in respect of the amount received by the employee from his employer at the time of voluntary retirement and, therefore, there is no question of treating this amount as not being covered under section 89(1) read with section 17(3) of the Income-tax Act, 1961. 3.2 The second issue before the CIT(A) was whether limit imposed by the proviso to section 10(10C), the assessee was not entitled to any relief under section 89(1). On this issue, the CIT(A) held that in view of the Board s Circular No. 667, it is clear that sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the High Court that whether on the facts and circumstances of the case, the Appellate Tribunal was right in holding that the voluntary retirement from service would fall under the term "termination of employment" within the meaning of section 17(3) of the Income-tax Act, 1961, and that the relief under section 89(1) is admissible in respect of the amount received by the assessee-employee from the employer at the time of voluntary retirement. This issue was decided by the Hon ble Madras High Court in favour of the assessee. Again, the Hon ble Madras High Court in the case of CIT v. G.V. Venugopal [2005] 273 ITR 307 had to consider the following questions : "On the facts and in the circumstances of the case and in law, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng this finding, the Tribunal followed the decision in the case of ITO v. Dilip Shirodkar [2005] 93 ITD 41 (Panaji). The learned Departmental Representative did not bring anything contrary to our knowledge on the issue. 4. In view of the above, we agree with the finding of the CIT(A) in the appeals of the Revenue that the payment received by the assessee has to be treated as profit in lieu of salary and cannot be treated otherwise, the assessee is entitled to relief under section 89 of the Act in respect of the taxable portion of the amount received at the time of voluntary retirement. The same is upheld. In view of the above, the ground of the revenue is dismissed. 5. As a result, all the appeals of the Revenue are dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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