2012 (8) TMI 974 - AT - Income Tax

Summary

Issues Involved:
The appeal filed by the Revenue against the order of the CIT(A) regarding the eligibility of employees for exemption u/s.10(10C) under the Exit Option Scheme declared by SBI and other Associate Banks.

Issue 1: Eligibility for Exemption u/s.10(10C)
The Revenue contended that employees opting for the Exit Option Scheme declared by SBI and other Associate Banks are not eligible for exemption u/s.10(10C) as per CBDT Circular dated 06/10/2009. The Assessing Officer rejected the claim of exemption based on this Circular.

Issue 2: Legal Requirements for Exemption
The CIT(A) held in favor of the assessee, citing the decision of the jurisdictional High Court in a similar case and the CBDT Circular approving the Exit Option Scheme for RBI employees. The CIT(A) found that the assessing officer was not justified in rejecting the claim of exemption u/s.10(10C) as the Exit Option Scheme fulfilled the legal requirements under Rule 2BA of the Income-tax Rules 1962.

Issue 3: Applicability of Monetary Limits
The appellant argued against the application of monetary limits specified under Instruction No.3 of 2011, stating that the exemption claimed u/s.10(10C) was disallowed based on specific Instructions by the Board, which were later found to be illegal or ultra vires.

Judgment Summary:
The assessee, an employee of SBI, retired under the Exit Option Scheme and claimed exemption u/s.10(10C) on the ex-gratia amount received. The Assessing Officer rejected the claim based on a CBDT Circular. The CIT(A) ruled in favor of the assessee, citing precedents and the CBDT Circular approving similar schemes. The ITAT Pune upheld the CIT(A)'s decision, stating that employees opting for the Exit Option Scheme were eligible for exemption u/s.10(10C). The appeal filed by the Revenue was dismissed, affirming the eligibility of employees for the exemption.