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Issues involved: Appeal against rejection of exemption u/s 10(10C) and compliance with conditions of section 10(10C) of the Income Tax Act, 1961.
Summary: The appeal was filed by the Assessee against the rejection of exemption u/s 10(10C) by the CIT(A)-IV, Baroda. The appellant claimed exemption for an amount received as "Exit Option Scheme" of State Bank of India, which was disallowed by the Assessing Officer u/s 143(3) of the IT Act, 1961. The first appellate authority affirmed the AO's action. However, a decision by the Co-ordinate Bench in a similar case and a judgment of the Madras High Court favored the assessee's claim for exemption u/s 10(10C). In the case of Shri Kanaiyalal Vadilal Bhavsar, the Madras High Court held that if an assessee is entitled to benefits as per the statute, he should be granted those benefits. The High Court emphasized that notions of equity do not apply in taxing statutes and if two reasonable interpretations of taxing statutes are possible, the one in favor of the assessee should be accepted. The Co-ordinate Bench followed this decision and directed to allow the claim of the assessee, as the facts of the present appeal were similar to the referenced case. Therefore, based on the decision of the Co-ordinate Bench and the judgment of the Madras High Court, the appeal of the Assessee was allowed, confirming the exemption u/s 10(10C) for the amount received under the "Exit Option Scheme" of State Bank of India. The order of the CIT(A) rejecting the exemption was deemed unlawful and against the principles of natural justice.
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