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2010 (11) TMI 125 - HC - Income TaxRectification of mistakes - Exemption u/s 10(10) - Voluntary Retirement Scheme (VRS) - Error apparent on record - Held that - having regard to the subsequent development viz., the judgment delivered by the honourable Supreme Court in Chandra Ranganathan v. CIT (2009 -TMI - 78651 - SUPREME COURT OF INDIA), which were against the order of the Division Bench of this court, the honourable Supreme Court held that the assessees are entitled to claim exemption under section 10(10C) of the Act. Hence, the matter has been finally decided by the honourable Supreme Court and therefore, the assessees viz., the petitioners herein, are entitled to claim exemption under section 10(10C) of the Income-tax Act and therefore, the order of the respondent, rejecting the applications for rectification of the assessment order set aside. - Decided in favor of assessee.
Issues: Petitioners seeking exemption under section 10(10C) of the Income-tax Act on terminal benefits received under Voluntary Retirement Scheme. Rejection of rectification applications under section 154 of the Act by the respondent. Conflict of views on exemption eligibility.
Analysis: 1. Exemption under Section 10(10C): The petitioners, former employees of ICICI Bank who opted for Voluntary Retirement Scheme, sought exemption under section 10(10C) of the Income-tax Act on terminal benefits exceeding Rs. 5 lakhs. The Assessing Officer granted relief under section 89(1) but did not consider the exemption under section 10(10C). The respondent rejected rectification applications stating the issue was debatable. The petitioners argued that subsequent Supreme Court judgment clarified eligibility for exemption under section 10(10C), overturning conflicting views. The High Court acknowledged the conflict but ruled in favor of the petitioners, citing the Supreme Court's final decision entitling them to claim exemption under section 10(10C). 2. Rectification Applications Rejection: The respondent contended that rectification applications were akin to review applications and could not be entertained unless errors were apparent on record. The respondent maintained that the assessment order was lawful and the petitioners were not eligible for exemption under section 10(10C). Despite the subsequent Supreme Court judgment, the respondent argued against interference with the orders. However, the High Court, considering the Supreme Court's final decision on the matter, set aside the respondent's rejection of rectification applications and directed the grant of exemption under section 10(10C) to the petitioners within 12 weeks. 3. Debatable Issue and Conflict of Views: The High Court recognized the conflicting views on the eligibility of ICICI Bank employees for exemption under section 10(10C) as per earlier Division Bench judgment. While the respondent rejected rectification applications citing the debatable nature of the issue, the subsequent Supreme Court judgment clarified the eligibility for exemption. The High Court emphasized that the Supreme Court's decision conclusively resolved the matter, establishing the petitioners' entitlement to exemption under section 10(10C) based on the revised interpretation of the law. In conclusion, the High Court allowed the writ petitions, directing the respondent to grant exemption under section 10(10C) of the Income-tax Act to the petitioners in accordance with the Supreme Court judgment, thereby resolving the dispute over the eligibility for exemption on terminal benefits received under the Voluntary Retirement Scheme.
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