2012 (8) TMI 987 - AT - Income Tax

Summary

Issues involved:
The appeal is regarding the exemption claimed by the assessee u/s 10(10C) of the Income Tax Act, 1961 for an ex gratia amount received upon voluntary retirement.

Summary:

Issue 1: Exemption u/s 10(10C) of the Act
The assessee, a former employee of State Bank of India, received an ex gratia payment of Rs. 5 lakhs upon voluntary retirement. The Assessing Officer disallowed the exemption claimed u/s 10(10C) citing non-compliance with Rule 2B of Income Tax Rules, 1962. The assessee's appeal before the CIT(A) was rejected, leading to the current appeal. The Tribunal noted a similar case where the High Court ruled in favor of the employee's entitlement to exemption u/s 10(10C) even if the payment is spread over years. Relying on this precedent, the Tribunal allowed the assessee's appeal, stating that the ex gratia amount was eligible for exemption u/s 10(10C) of the Act.

Decision:
The appeal filed by the assessee is allowed, and the compensation amount of Rs. 5 lakhs is deemed eligible for exemption u/s 10(10C) of the Act.

Note:
Separate judgment was not delivered by the judges.