2011 (11) TMI 663 - AT - Income Tax

Exemption u/s 10(10C) - A.O under the re-assessment disallowed the claim on the basis that the State Bank of India has clearly mentioned in Exit Scheme that employees will not get exemption u/s. 10(10C) - Held that - Employees who took the voluntary retirement under the Exit Option Scheme dated 29.4.2005 announced by the State Bank of India are eligible for exemption u/s. 10(10C) of the Act.

Summary

Issues:
1. Allowance of exemption u/s. 10(10C) of the Act based on original return of income filed by the assessee.

Analysis:
The judgment by the Appellate Tribunal ITAT Pune involved the issue of the Revenue challenging the first appellate order regarding the allowance of exemption u/s. 10(10C) of the Act based on the original return of income filed by the assessee. The assessee, an employee of State Bank of India, had claimed exemption under this section for the ex-gratia amount received on voluntary retirement under the "Exit Option Scheme." The Assessing Officer disallowed the claim, stating that the Exit Scheme clearly mentioned that employees would not get exemption u/s. 10(10C) of the Act. However, the Ld. CIT(A) allowed the exemption, citing a decision of the Mumbai Bench of the Tribunal in a similar case. The Tribunal upheld the CIT(A)'s decision based on previous judgments and the absence of any contrary decision cited by the Department.

The Tribunal considered the argument of the Ld. D.R. and reviewed the orders of the authorities below. It noted that in a previous case, the Mumbai Bench of the Tribunal had held that employees who took voluntary retirement under a similar Exit Option Scheme announced by the State Bank of India were eligible for exemption u/s. 10(10C) of the Act. This decision was based on the precedent set by the Hon'ble jurisdictional Mumbai High Court in another case. The Tribunal also referred to its earlier decision in a related case. As no contradictory decision was presented by the Department, the Tribunal found no fault in the first appellate order and upheld it, rejecting the grounds raised by the Revenue.

In conclusion, the Tribunal dismissed the appeal, affirming the decision to allow the exemption u/s. 10(10C) of the Act based on the original return of income filed by the assessee. The order was pronounced in the open Court on 8th November 2011.