TMI Blog2007 (3) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the RBI the employer, to show any alternative opportunities to the persons who have opted under the OERS. In other words, no evidence or material has been brought before us to show that there has been an obligation on the part of the RBI to employ the retiring employees in any other company or concerns under the same management. We, therefore, on the basis of the scheme and the actual facts that are brought out by the bank itself, do not agree with the stand of the Assessing Officer or the CIT(A) that the conditions or the guidelines prescribed under rule 2BA are not complied in the OERS of the RBI. Any statement that it will not fill up the vacancies caused as a result of OERS would have resulted in opposition by the employees themselves as it will be a repressive measure against the labour. The sums in question are clearly the part of salary in the form of profits in lieu of salary as defined in section 17(3) of the Act. These are amount of compensation received by the employee from the employer in connections with the terms of employment and, therefore, the assessees in question are clearly entitled for relief under section 89 in accordance with law in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No. 4484/Mum/2006 ITA No. 4485/Mum/2006 ITA No. 4486/Mum/2006 ITA No. 4487/Mum/2006 ITA No. 4488/Mum/2006 ITA No. 4489/Mum/2006 ITA No. 4490/Mum/2006 ITA No. 4491/Mum/2006 ITA No. 4492/Mum/2006 ITA No. 4493/Mum/2006 ITA No. 4494/Mum/2006 ITA No. 4495/Mum/2006 ITA No. 4496/Mum/2006 ITA No. 4535/Mum/2006 ITA No. 4536/Mum/2006 ITA No. 4537/Mum/2006 ITA No. 4538/Mum/2006 ITA No. 4539/Mum/2006 ITA No. 4540/Mum/2006 ITA No. 4541/Mum/2006 ITA No. 4542/Mum/2006 ITA No. 4543/Mum/2006 ITA No. 4544/Mum/2006 ITA No. 4606/Mum/2006 ITA No. 4609/Mum/2006 ITA No. 4610/Mum/2006 ITA No. 4674/Mum/2006 ITA No. 4675/Mum/2006 ITA No. 5407/Mum/2006 ITA No. 5492/Mum/2006 ITA No. 5493/Mum/2006 ITA No. 5494/Mum/2006 ITA No. 5495/Mum/2006 ITA No. 5496/Mum/2006 ITA No. 5497/Mum/2006 ITA No. 5498/Mum/2006 ITA No. 5499/Mum/2006 ITA No. 5500/Mum/2006 ITA No. 5501/Mum/2006 ITA No. 5502/Mum/2006 ITA No. 5503/Mum/2006 ITA No. 5504/Mum/2006 ITA No. 5505/Mum/2006 ITA No. 5506/Mum/2006 ITA No. 5547/Mum/2006 ITA No. 5548/Mum/2006 ITA No. 5549/Mum/2006 ITA No. 5550/Mum/2006 ITA No. 5551/Mum/2006 ITA No. 5581/Mum/2006 ITA No. 5582/Mum/2006 ITA No. 5587/Mum/2006 ITA No. 5588/Mum/2006 ITA No. 5590/Mum/2006 ITA No. 5591/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances in each of the case are more or less identical and it has been agreed by both the sides that we may take up one appeal for consideration and accordingly dispose of all other appeals. The representatives for the assessees were different advocates and chartered accountants; in some cases none appeared. Shri V.H. Patil was the Authorized Representative for some of the assessees. He was the one who argued for most of the assessees and it may be stated that the other Authorized Representatives have only followed his lines of argument. Shri B.R. Kamat, the learned Departmental Representative fairly admitted that the facts and circumstances in all these appeals are identical. 3. Shri V.H. Patil, the senior counsel, addressed us on the facts of Shri Patric F. Britto (ITA No. 4493/Mum/2006 for asst. yr. 2004-05). The assessee in this case is an individual and was an employee of Reserve Bank of India (RBI). RBI had formulated a scheme in the name and style of Optional Early Retirement Scheme (OERS) for the employees who have completed twenty-five years of service and who have also completed the age of fifty years. It may be stated that the OERS was to benefit the employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se a copy of the extract containing the salient features of the Optional Early Retirement Scheme (OERS). It may be observed therefrom that the income-tax shall be deducted at source on the entire amount payable as ex gratia. Besides, the ex gratia amount will be payable in one lump sum subject to the recovery of income-tax, which is to be borne entirely by the employee. It has also been observed from the clarifications received on the scheme of Central Office that since the OERS will not comply with r. 2BA of the IT Rules, 1962, and accordingly the amount received by the employees under the OERS would not be eligible for exemption under s. 10(10C) of the Act. From the above the learned CIT(A) was of the view that the RBI had admitted that it had not complied with r. 2BA of the IT Rules because it was not confirmed whether the vacancies caused by the retirement of the employees will ever be filled in the future. Accordingly, it was concluded that the said OERS does not confirm to the provisions of r. 2BA of the IT Rules and, therefore the employees opting under the above scheme do not qualify for exemption under s. 10(10C) of the IT Act. In this case the learned CIT(A) was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Class-IV 9,557 9,256 9,053 8,222 7,709 31,275 29,922 28,884 24,994 22,727 Reduction in number of employees 1,353 1,038 3,890 2,267 8,548 As a result of the OERS a record number of employees opted for the retirement and thus there was a great reduction in the manpower employed to do the same or even the increased load of work over the years. Our attention was also drawn to pp. 31, 32 and 33 of the paper book, wherein the RBI has discussed the Human Resource Development and Organizational matters as a result of the OERS for a brief period. The learned counsel further contended that the RBI had deducted tax at source only on the opinion of the chartered accountants M/s C.C. Chokshi Co., which opinion again came up for consideration before the Calcutta High Court in Writ Petn. No. 4957 of 2004, wherein prima facie their Lordships have considered it to be doubtful. The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral, State or Provincial Act and an institution declared to be a University under s. 3 of the University Grants Commission Act, 1956 (3 of 1956); or (vii) an Indian Institute of Technology within the meaning of cl. (g) of s. 3 of the Institutes of Technology Act, 1961 (59 of 1961); or (viia) any State Government; or (viib) the Central Government; or (viic) an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette, specify in this behalf; or (viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf, on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-cl. (i), a scheme of voluntary separation, to the extent such amount does not exceed five lakh rupees : Provided that the schemes of the said companies or authorities or societies or Universities or the Institutes referred to in sub-cls. (vii) and (viii), as the case may be, governing the payment of such amount are framed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that the above condition is not satisfied. What the rule requires is a minimum. It is too narrow and against the legislative intention if the scheme was to be not applied to the benefit of the employees who have completed more than 10 years of service or more than 40 years of age, which is exactly the case before us. 9. The other objection of the AO is that the scheme of retirement drawn did not result in overall reduction of the existing strength of employees. The object of the entire scheme in our opinion is plain and simple'the reduction of the employees. Now we may examine the satisfaction of the above guidelines on the basis of the clarity we have obtained from the annual report of the RBI placed at pp. 31 to 33 of the paper book, wherein it has been stated that there has been significant reduction in the staff strength with the introduction of the OERS. The reduction in the number of employees in different categories has already been extracted above. The scheme of OERS read with its objectives thereunder clearly shows that OERS has been framed only for reduction of the staff. In order to reduce the manpower employed due to technological upgradation undertaken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with any scheme or schemes of voluntary retirement. If a plain literal interpretation of statutory provision produces a manifestly absurd and unjust result, which the legislature could not have intended, the Court is supposed to modify the language used by the legislature, even to do some violence to it so as to achieve the obvious intention of the legislature and produce a rational construction. 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 the object and purpose for which the same is enacted. Sec. 10(10C) was inserted in order to make voluntary retirement attractive so as to reduce human complements for securing economic viability of certain companies. This object was elaborated by various Departmental circulars and explanatory statements issued from time to time. Similarly, r. 2BA of the IT Rules, 1962, which was inserted by the IT (Sixteenth Amendment) Rules, 1992, was amended from time to time. All these go to show that this was intended to make voluntary retirement more attractive and beneficial to the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal position and that is why it went in for advice in the matter. The correctness of the advice rendered to them, however, appears to be doubtful. This Court, however, does not pass any opinion with regard thereto. This will answer whether the opinion expressed by the chartered accountant on the issue will make the sums in question taxable. Neither the opinion of the chartered accountants nor the views of the RBI will finally determine the fate of exemption that is claimed under s. 10(10C) but the satisfaction of the conditions or guidelines laid down by the IT Rules, 1962. A plain reading of section and guidelines of r. 2BA shows that the scheme in question leaves no doubt in our minds that the sums in question are clearly exempt under s. 10(10C) of the Act upto the extent of Rs. 5 lakhs. On the excess receipts the assessee is entitled to relief under s. 89 of the Act. The provisions of s. 89 of the Act read as under : 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, if any one financial year, of salary, for more than twelve months or a payment which under the provisions of cl. (3) of s. 17 is a p ..... 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