TMI Blog2009 (7) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the Hon'ble Madras High Court in the case of M. Chelladurai Ors.[ 2008 (2) TMI 420 - MADRAS HIGH COURT] , it is abundantly clear that the issue involved gives rise to a substantial question of law. The facts of the present case are similar to that as considered by the Hon'ble Madras High Court in the above case. No decision of any other High Court on the impugned issue has been brought to our notice. In this view of the matter, we are of the considered opinion that we are required to follow the judgment of the Hon'ble Madras High Court in deciding the impugned issue. Accordingly, we hold that the assessee was not entitled to deduction under s. 10(10C) of the Act. The issue has been considered by the Hon'ble jurisdictional High Court in the case of SAIL DSP VR Employees Association 1998 vs. Union of India [ 2003 (2) TMI 46 - CALCUTTA HIGH COURT] in which their Lordships held as under: ''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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of s. 10(10C) are to be interpreted liberally in a manner which is beneficial to retired employees. In view of the above, I respectfully following the decisions of Hon'ble jurisdictional High Court, Bombay High Court and Karnataka High Court agree with the ld JM and hold that the assessee is entitled to exemption u/s. 10(10C) to the extent of Rs. 5 lakhs. - G.D. AGRAWAL, VICE PRESIDENT, N.L. DASH, J.M. AND B.K. HALDAR, A.M. For the Appellant : D.K. Sonowal, P.K. Roy For the Respondent : G.P. Sinha, A. Roy ORDER B.K. HALDAR, A.M. 1. This is an appeal filed by the Revenue against the order of the learned CIT(A)-XIV, Kolkata, dt. 4th June, 2008 for the asst. yr. 2002-03. 2. In this appeal the Revenue has taken following effective ground of appeal: That the CIT(A) erred in law in deleting the disallowance of the assessee's claim of exemption of Rs. 5,00,000 under Section 10(10C) on the ground that Hon'ble Madras High Court in their order dt. 12th March, 2008 made on similar issue has ordered that no deduction under Section 10(10C) is available to the employee if the schemes framed are not in accordance with the requirement of Rule 2B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the judgment of the Hon'ble Madras High Court in the case of M. Chelladurai and Ors. (supra), it is abundantly clear that the issue involved gives rise to a substantial question of law. The facts of the present case are similar to that as considered by the Hon'ble Madras High Court in the above case. No decision of any other High Court on the impugned issue has been brought to our notice. In this view of the matter, we are of the considered opinion that we are required to follow the judgment of the Hon'ble Madras High Court in deciding the impugned issue. Accordingly, we hold that the assessee was not entitled to deduction under Section 10(10C) of the Act. 10. In the result, the appeal of the Revenue is allowed. N.L. DASH, J.M. 20th Jan., 2009 1. Aggrieved with the order of the learned CIT(A), Central-XIV, Kolkata, for the asst. yr. 2002-03 for allowing relief under Section 10(10C), the Revenue has taken the only ground as follows: That the CIT(A) erred in law in deleting the disallowance of the assessee's claim of exemption of Rs. 5,00,000 under Section 10(10C) on the ground that Hon'ble Madras High Court in their order dt. 12th March, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable on the amount received under a scheme of voluntary retirement or a voluntary separation framed in accordance with the guidelines prescribed and specified in Rule 2B. As the schemes had not been introduced for the purpose of making over the reduction in the existing strength of the employees and do not provide that the vacancy caused by the voluntary retirement or voluntary separation shall not be filled up, the requirements (iii) and (iv) of Rule 2BA have not been fulfilled. 17.... 18. In order to entitle the person the benefit under Section 10(10C) of the Act the provisions of Section 10(10C) and Rule 2BA should be complied with cumulatively and compliance of some of them would not entitle the employee the benefit as claimed for. 19. CBDT Circular No. 640 [(1992) 108 CTR 17] has also clarified that if all the conditions specified in Section 10(10C) and Rule 2BA of the Rules are satisfied, then only the assessee would be entitled to the benefit and in those cases, the employer need not deduct at source. Thus, it is clear that the scheme is not strictly in accordance with Section 10(10C) and Rule 2BA. 20. For the foregoing reasons, we are not in acceptance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has opted for retirement voluntarily, there has to be termination by the employer and, therefore, while terminating service any amount paid on account of voluntary retirement would be profits in lieu of salary covered under Section 17(3) of the Act. The amount paid on termination of service due to voluntary retirement may be an ex gratia payment, but it would be profits in lieu of salary as contemplated under Section 17(3) of the Act. Whether the termination of employment took place on account of the voluntary decision of the employee or not is wholly irrelevant. Therefore, the amount received by the assessee being profits in lieu of salary as contemplated under Section 17(3) of the Act, the assessee would be entitled to the relief under Section 89 of the Act. The assessee is entitled to exemption under Section 10(10C) and also rebate under Section 89 in respect of the amount received of Rs. 5 lakhs on account of voluntary retirement. (iii) CIT v. P. Surendra Prabhu (2005) 198 CTR (Kar) 209 : (2005) 279 ITR 402 (Kar) (order dt. 21st Sept., 2005)-In this case the Hon'ble Karnataka High Court has held that Section 10(10C) was inserted by the Finance Act, 1987. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under Section 10(10C) of the Act and also relief under Section 89(1) of the Act in respect of the amount received in excess of Rs. 5 lakhs from his employer. The assessee's claim was rejected by the AO. The CIT(A) granted the assessee relief under Section 89(1) and this was upheld by the Tribunal. The Tribunal also allowed appeals by the bank against orders holding the bank an assessee in default under Section 201(1) and levying interest under Section 201(1A), for short deduction of tax at source or sums over and above the exemption of Rs. 5 lakhs, on which it allowed relief under Section 89(1). On appeals to the High Court by the assessee and Revenue: Held, (i) that the assessee, employee of the respondent-bank was not only entitled to the benefit of exemption under Section 10(10C) of the Act to the extent prescribed in the provision itself but for any amount over and above the prescribed limit under the aforesaid provision, the assessee was also entitled to relief under Section 89(1) of the Act r/w Rule 21A. (ii) That the bank could not be treated as an assessee in default because there was no default or failure on its part in granting relief under Section 89(1) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs. 52,200 received by the assessee as payment under the 'voluntary separation programme' from the company was liable to be included in the assessee's total income for the asst. yr. 1977-78. (viii) SAIL DSP VR Employees Association 1998 v. Union of India (2003) 181 CTR (Cal) 367 : (2003) 262 ITR 638 (Cal). In this case it has been held as under: It was 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 character would not change because of being stretched over the period of payment of dues under the scheme. The amount receivable under clause 4. l(i) of the scheme, to the extent it did not exceed Rs. 5 lakhs qualified for exemption under Section 10(10C), but not the other amounts payable under Clauses (ii), (iv), (v) and (vi), etc. thereunder. 4.1 I dissent with my learned Brother because a catena of decisions has elaborated the issue in depth as has been relied upon by the Co-ordinate Bench decision of the Kolkata Bench cited supra in para 4 as above. Holding the same view and respectfully following the decision I beg to differ from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of employee like this who opts for voluntary retirement under a particular scheme formed (framed) by each principal (banker) should not be allowed to be deprived of the exemption on the ground of technicalities. When there is specific decision and the common interpretation is that the Act has to prevail over the rules, rules are procedural which can be amended or which require to be amended on allowing reasonable opportunity. The Act should not be made obsolete due to procedural lapse. Even assuming that as per the assessment order, the scheme is not in conformity with the provisions of Rule 2BA, nothing prevented the AO to ask the concerned authority to amend the scheme and rectify the procedural lapses. After all, an AO is a quasi judicial officer. He is not only a tax gatherer, but he is also a quasi judicial officer to adjudicate the issues. He is having both power of administration and justice. That does not mean that simply because a scheme is not in conformity with the provisions of a particular rule, the AO is not supposed to make the provisions of the section obsolete and deny/refuse to grant exemption to the assessee on that ground alone. Holding this view of the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rule 2BA of the IT Rules. The exemption of tax under Section 10(10C) is available on the amount received under a scheme of voluntary retirement/voluntary separation framed in accordance with the guidelines prescribed and specified in Rule 2BA and that the Bombay High Court in their order reported in CIT v. Chhajer Packaging Plastics (P) Ltd. (2008) 214 CTR (Bom) 389 : (2008) 300 ITR 180 (Bom) decided that the monetary limit fixed administratively will not apply to the cases of substantial question of law. 2. The brief facts of the case are that the assessee is a retired employee of Standard Chartered Grindlays Bank. During the year under consideration, the assessee had exercised the option for retirement under the scheme floated by the bank known as Early Separation Plan (ESP) and received compensation of Rs. 18,87,798 from his employer-bank. No deduction under Section 10(10C) had been allowed in the TDS certificate in Form No. 16 issued by the said bank. Return of income for the year under consideration was filed by the assessee claiming exemption of Rs. 5,00,000 under Section 10(10C) which was processed under Section 143(1) of the Act. The assessment was reopened under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of law. The facts of the present case are similar to that as considered by the Hon'ble Madras High Court in the above case. No decision of any other High Court on the impugned issue has been brought to our notice. In this view of the matter, we are of the considered opinion that we are required to follow the judgment of the Hon'ble Madras High Court in deciding the impugned issue. Accordingly, we hold that the assessee was not entitled to deduction under Section 10(10C) of the Act. 4. The learned JM disagreed with the said view of learned AM and proposed a separate order dismissing the appeal of the Revenue. In his order, he has referred to/relied upon the following decisions: (i) CIT v. M. Raman (1999) 152 CTR (Mad) 497 : (2000) 245 ITR 856 (Mad); (ii) CIT v. Nagesh Devidas Kulkarni and Ors. (2007) 210 CTR (Bom) 471 : (2007) 291 ITR 407 (Bom); (iii) CIT v. P. Swendra Prabhu (2005) 198 CTR (Kar) 209 : (2005) 279 ITR 402 (Kar); (iv) CIT v. J. Visalakshi (1994) 120 CTR (Mad) 248 : (1994) 206 ITR 531 (Mad); (v) P. Arunachalam v. CIT (2000) 241 ITR 827 (Mad); (vi) CIT v. G.V. Venugopal (2005) 193 CTR (Mad) 661 : (2005) 273 ITR 307 (Mad); (vii) SAIL DS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. (Emphasis, italicized in print, supplied) From the above it is evident that their Lordships of the jurisdictional High Court held that an employee, who takes voluntary retirement, is entitled to deduction under Section 10(10C) even if the payment is stretched over a period of years. They have also held that provision of Section 10(10C) should be interpreted in a manner beneficial to the optee for voluntary retirement. It may be pointed out that in the above-mentioned case, the employer, i.e. SAIL was of the opinion that the employees were not entitled to exemption under Section 10(10C) and, accordingly, SAIL had been deducting tax at source on the amount paid under their voluntary retirement scheme. The facts are similar in the assessee's case, because in the case of the assessee also, the employer believing that the assessee is not entitled to deduction under Section 10(10C) has deducted tax at source on the amount paid on voluntary retirement. The facts being identical, the above decision of Hon'ble jurisdictional High Court would be squarely applicable to the case under appeal before the Tribunal. 6. Similarly, Hon'ble Bombay High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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