2008 (9) TMI 865 - AT - Income Tax

Summary

Issues:
- Exemption under section 10(10C) of the Income-tax Act for voluntary retirement package.

Analysis:
The case involved an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) regarding the assessee's entitlement to exemption under section 10(10C) of the Income-tax Act for a payment received under a voluntary retirement package. The assessee, a retired RBI employee, claimed exemption for a portion of the retirement payment disallowed by the Assessing Officer. The Commissioner, following a decision by the Income-tax Appellate Tribunal, Mumbai Bench, allowed the assessee's appeal. The Revenue challenged this decision before the ITAT Chennai.

The primary contention raised was regarding the tax effect, with the assessee's counsel arguing that the appeal should be dismissed based on the Central Board of Direct Taxes' Instruction No. 5 of 2008, which set monetary limits for filing appeals. The Revenue, however, referred to Instruction No. 2 of 2005, emphasizing cases involving substantial questions of law or recurring legal issues should be considered on merits without monetary limits. The ITAT reviewed the relevant instructions and noted that Instruction No. 5 superseded previous instructions, making the reference to Instruction No. 2 irrelevant in this context.

The ITAT highlighted the importance of precedent and the binding nature of decisions by the jurisdictional High Court. Citing legal principles, including the rule of precedent and the supervisory jurisdiction of the High Court, the ITAT emphasized its obligation to follow the High Court's decisions. Referring to previous rulings by the apex court, the ITAT underscored the significance of legal certainty and the doctrine of precedent in upholding the rule of law. Consequently, the ITAT dismissed the Revenue's appeal based on the tax effect, as the jurisdictional High Court had already ruled on a similar case involving tax effect.

In conclusion, the ITAT upheld the decision of the Commissioner of Income-tax (Appeals) and dismissed the Revenue's appeal based on the tax effect, in line with the precedent set by the jurisdictional High Court.