2010 (1) TMI 961 - AT - Income Tax

Exemption claimed u/s. 10(10C) - Ex gratia amount received by the assessee - voluntary retirement scheme framed By SBI under the name and style of Exit-Option Scheme - ITO disallowed the Amount Receipt of VRS on the ground of that the scheme framed by SBI is not in accordance with Rule 2BA. HELD THAT - In appeal, CIT rightly allowed the deduction to the assessee, following the decisions of the High Court in the case of CIT vs. G V Venugopal 2004 (12) TMI 35 - MADRAS HIGH COURT held second proviso to s. 10(10C) only refers to exemption claimed in any other assessment year. It is well set tled that every assessment year is a self-contained unit. The assessment year in question in the present case is 2001-02 and the exempt ion claimed is in respect of this assessment year, although the exemption granted u/s. 89(1) has been spread over several assessment years. The mere fact that the relief has been spread over several years, does not mean that the relief is not in respect of a particular assessment year. The word salary as defined in s. 17 includes any profit in lieu of salary, which has been defined in s. 17(3) to include any amount of compensation due or received by the assessee from his employer or former employer in connection with the termination of his employment. Hence, payment under the voluntary retirement scheme is covered by the word salary , which has been given a very wide definition in s. 17. Since the assessee is covered by s. 89, he will get both the benefits, which he has claimed for. Apart from the above, it is well-settled that if two reasonable interpretations of taxing statutes are possible, the one in favour of the assessee should be accepted. CIT vs. Naga Hills Tea Co. Ltd. 1973 (2) TMI 6 - SUPREME COURT applied. Thus if there is a decision on an issue of any High Court and there is no contrary decision of any other High Court , then in absence of the same, even if there is no decision on the issue of the jurisdictional High Court , the decision rendered by the other High Courts should be respectfully followed by the courts below the High Court. Ground of appeal of the Revenue is dismissed.

Summary

Issues:
1. Whether the addition of Rs.3,44,037/- under section 10(10C) of the Income-tax Act, 1961 should be deleted.
2. Whether the decisions of non-jurisdictional High Courts can be relied upon for allowing deductions under section 10(10C) of the Income-tax Act, 1961.

Analysis:
Issue 1:
The appeal was filed by the Revenue against the order of the Learned Commissioner of Income-tax (Appeals) regarding the addition of Rs.3,44,037/- under section 10(10C) of the Income-tax Act, 1961 for Assessment Year 2007-08. The assessee had received this amount as Ex gratia Payment upon voluntary retirement from service and claimed it as exempt under section 10(10C). The Assessing Officer disallowed the amount citing non-compliance with Rule 2BA of the Income Tax Act, 1962. The assessee argued in favor of deduction based on various High Court judgments supporting the allowance of such payments. The Commissioner of Income-tax (Appeals) considered these arguments and decided in favor of the assessee, directing the Assessing Officer to allow the deduction under section 10(10C) of the Income Tax Act.

Issue 2:
The Revenue contended that the decisions relied upon by the assessee were of non-jurisdictional High Courts and there was no direct judgment from the Gujarat High Court. However, the Commissioner of Income-tax (Appeals) upheld the deduction based on the decisions of High Courts mentioned by the assessee. The Tribunal considered the judgment of the Madras High Court, which emphasized granting benefits to the assessee as per the plain language of the statute. It was noted that in the absence of a contrary decision from any other High Court, decisions of other High Courts should be followed. Therefore, the Tribunal dismissed the appeal of the Revenue, confirming the order of the Commissioner of Income-tax (Appeals) to allow the deduction under section 10(10C) of the Income Tax Act.

In conclusion, the Tribunal upheld the decision of the Commissioner of Income-tax (Appeals) to allow the deduction of Rs.3,44,037/- under section 10(10C) of the Income Tax Act, 1961, based on the judgments of various High Courts supporting such deductions.