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Smt. Smita Chatterjee and Others Versus Deputy Commissioner of Income-tax, Circle-22, Kolkata.

2016 (6) TMI 929 - ITAT KOLKATA

Rectification of mistake - benefit of exemption u/s. 10(10C) denied - non-consideration of the judgment of Hon’ble Calcutta High Court and the Third Member decision - Held that:- We find that the Third Member decision of this Tribunal in the case of Krishnagopal Saha, [2009 (7) TMI 173 - ITAT CALCUTTA-B ] had held that in respect of an assessee who was a former employee of Standard Chartered Bank were admittedly voluntary retirement scheme offered by Standard Chartered Bank was not in conformity .....

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rovisions contained in the Act. Rule is only a subordinate piece of legislation. The Act specifically provides for granting exemption u/s. 10(10C) of the Act to the extent of ₹ 5 lacs and applying the ‘purposive test’ of those provisions, we hold that the assessee should be given the benefit of exemption u/s. 10(10C) of the Act to the extent of ₹ 5 lacs. Hence, non-consideration of the judgment of Hon’ble Calcutta High Court in SAIL DSP VR. EMPLOYEES ASSOCIATION 1998 Vs. UNION OF IND .....

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2344, 2345, 2346, 2347, 2348, 2349, 2350/Kol/2013, - Dated:- 1-6-2016 - Shri N. V. Vasudevan, JM & Shri M. Balaganesh, AM For The Appellant : Shri B.K. Ghosh, Pijush Dey & M.K. Banerjee, FCA For The Respondent : Shri Sallong Yaden, Addl. CIT, Sr. DR ORDER Per Bench: All these appeals by assessee are arising out of separate orders passed u/s. 154 of the Income-tax Act, 1962 (hereinafter referred to as the Act ) of CIT(A)-XIV, Kolkata vide Appeal No. 175,156,175,155,143,183,161,149,186,17 .....

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essee for AY 2004-05 was filed on 06.08.2004 showing returned income of ₹ 26,27,900/-. The return was processed on 21.02.2005. The case was selected for scrutiny. Notices u/s. 143(2) and u/s. 142(1) were duly served on the assessee. In response to these notices, the assessee furnished some necessary documents and explained the contents of the return. The Ld.AO observed that the assessee derived salary from the Hongkong and Shanghai Banking Corporation Ltd. of 21, B. B. D. Bag, Kolkata, and .....

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ot be included in computing his total income if the amount received does not exceed the amount equivalent to three months salary for each completed year of service or salary at the time of retirement multiplied by the balance months of service left before the date of his retirement on superannuation. From the copies of the last pay slip and individual worksheet , the Ld AO ascertained that Basic Pay of the assessee was ₹ 10,120/- and months left for his normal retirement was 270.21 months. .....

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on the A/R of the assessee requested to grant exemption u/s. 10(10C) which was rejected by the AO in the assessment made u/s. 143(3) of the I. T. Act and pleaded to rectify the order u/s. 154 of the I. T. Act. The jurisdiction of section 154 is confined to the rectification of mistake apparent from the records and it does not envisage the rectification of error of judgment. In this case the assessee in his rectification u/s. 154 claimed to grant exemption u/s. 10(10C) which was denied by the AO .....

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Act before the Ld. CIT(A). The Ld. CIT(A) disposed of the appeal by observing as under: 7.I have carefully considered the submissions of the appellant. As regard the first ground of the assessee it is seen that the Assessing Officer had considered the submission of the assessee while rejecting the claim of exemption u/s. 10(10C) of the Income Tax Act, 1961 in the order passed u/s. 143(3). After considering all the facts, provisions of the Act and the provisions of the Rules the Assessing Office .....

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s. 143(3). Since the issue of granting or otherwise of the exemption u/s. 10(10C) of the Income Tax Act had already been considered and decided by the Assessing Officer after due consideration of facts and law, an amendment as requested by the assessee on the same issue is outside the ambit of section 154 and thus the Assessing Officer has rightly rejected the assessee s application as there was no mistake apparent from the records. There is no scope for the Assessing Officer to change his opini .....

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le 2BA of the Income Tax Rules, 1962 read with section 10(10C) of the I. T. Act, 1961 were not satisfied in the assessee s case. In accordance with the section 10(10C) of the Act an exemption to the extent of ₹ 5,00,000/- is admissible from any amount received or receivable by the employee under a scheme of Voluntary Retirement framed by the employer. However, in accordance with the first proviso to section 10(10C) the exemption as mentioned aforesaid is allowable if the scheme is framed i .....

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passed u/s.143(3) that the above requirement prescribed under the Rule 2BA has not been fulfilled in this case. Either during the proceedings u/s. 154 or the appellate proceedings, this finding of the Assessing Officer could not be controverted by the appellant. The issue raised by the assessee in this ground is debatable and it is outside the scope of section 154 of the Act. Since the ground raised has no merit, it is dismissed. 9. As regards ground no. 3 the issue raised in the ground is not .....

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le High court also gave the finding that nowhere there was any provision in the scheme which could be said to be in conflict with the requirements of Rule 2BA. However, in the present case, the issue relates to the Voluntary Retirement Scheme floated by the Hongkong & Sanghai Banking corporation Limited, and the Assessing Officer gave the finding in the assessment order that the scheme was not in conformity with Rule 2BA of the Income Tax Rules, 1962. Hence, there is no error apparent from t .....

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e Hon ble ITAT, B Bench, by a consolidated order dated 30th March, 2012 held in favour of those forty employees and vacated orders of the lower authorities. ii) Let us now take note of a Third Member decision of this very Tribunal in the case of DCIT - vs. - Krishna Gopal Saha (121 ITD 368 (TM ) wherein the assessee was a former employee of Standard Chartered Bank and admittedly the Voluntary retirement scheme offered by the SCB was not in conformity with Rule 2BA of the Income Tax Rules (as not .....

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find that as held by Hon'ble Calcutta High Court in the case of SAIL DSP VR Employees' Association (supra), undoubtedly Their Lordships held that there is no conflict between the VRS Scheme of the SAIL employee and Rule 2BA, but Their Lordships also observed as follows :- "An expression used in the statute is not always to be interpreted literally or grammatically. Sometimes, it has to be interpreted having regard to the context in which the expression is used and having regard to t .....

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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 ambituity" iv) It is thus free from any doubt that, as held by Hon'ble jurisdictional High Court, that the provisions of section 10(10C) are to be "interpreted in a manner beneficial to the optee for retirement, if there is any ambiguity". In view of this binding .....

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- vs - Saurashtra Kutch Stock Exchange Ltd. (305 ITR 227) wherein Their Lordships have held that non-consideration of a judgment of Hon ble jurisdictional High Court is also a mistake apparent on record, which can be rectified under section 154. What follows, inter alia, is that in a situation in which Hon ble jurisdictional High Court is not followed, such a non-consideration is clearly a mistake apparent on record. 5. The Ld. CIT(A) disposed of this 154 petition vide his order dated 12.06.201 .....

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on. Accordingly, the rectification application/petition of the appellant is rejected. The assessee preferred an appeal before us against this order dated 12.06.2013. 6. The Ld. AR relied on the Third Member decision of this Tribunal in the case of DCIT Vs. Krishnagopal Saha 121 ITR 368(TM ) and Hon ble Calcutta High Court decision in SAIL DSP VR. EMPLOYEES ASSOCIATION 1998 Vs. UNION OF INDIA & OTHERS (2003) 262 ITR 638 (Cal) and Hon ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch .....

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ival submissions and perused the material available on record and the case laws cited above. The facts stated hereinabove remained undisputed and hence, the same are not reiterated for the sake of brevity. We find that the Hon ble Calcutta High court in the case of SAIL DSP VR. EMPLOYEES ASSOCIATION , supra had held as under: Section 10(10C) : Exemption : Availability and extent of : Section 10(10C) uses the expression any amount received by an employee . . . at the time of his voluntary retirem .....

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ent without having voluntarily retired. The expression amount received even if we interpret it literally or grammatically would be some thing other than the terminal benefits. Inasmuch as, the terminal benefits are otherwise payable on cessation of employment under the provisions of the statute. An employee cannot be deprived of such dues on any ground whatsoever unless provided in the respective statutes governing those respective terminal benefits. An expression used in the statute is not alwa .....

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Similarly, rule 2BA, which was inserted by the Income-tax (Sixteenth Amendment) Rules, 1992, was amended from time to time. All these go to show that this was intended to make the 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. Therefore, while searching for the meaning of the word amount received used in section 10(10 .....

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h as, on the date an employee opts for voluntary retirement, he is already entitled to the accumulation of the provident fund in his account governed by the Provident Funds Act and the scheme, gratuity payable under the Payment of Gratuity Act, encashment of leave pay under the leave rules and pension payable under the pension rules, if there be any. These are all terminal benefits to which an employee is entitled even without the scheme. This entitlement cannot be taken away under any scheme. T .....

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ical and literal meaning. As discussed above, we do not find any difficulty in construing the meaning of the expression amount received even by literal and grammatical meaning which is something different from an amount receivable by an employee under a particular statute or enactment or rules and to which he is otherwise entitled even without the voluntary retirement scheme and which has already accrued to him and of which he cannot be deprived. For all these reasons, we are unable to pursuade .....

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of taxes already deducted. In case any amount remaining after adjustment, in that event, such amount be refunded to the respective employees within a period of three months of the instalment last payable or within one year from date whichever is later by the concerned authority with whom the tax is lying in deposit. However, the respondent SAIL shall recalculate the amount adjustable or refundable, as the case may be. Such calculation relating to the respective employees shall be furnished by SA .....

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