2010 (7) TMI 754 - HC - Income Tax

Whether the ex-gratia/compensation receipt under V.R.S. partakes the character of salary or not - Whether the benefit of section 89(1) of the Act could be given to the assessee receiving ex-gratia/compensation or not There is no prohibition to the twin benefits in respect of the amount received under the Voluntary Retirement Scheme. The relief contemplated under Section 89 of the Act is aimed to mitigate the hardship that may be caused on account of the high incidence of tax due to progressive increase in tax rates and thus held that the benefits under Section 10 (10-C) and 89 could be granted to the assessee, view taken by the Tribunal has been upheld and appeal filed by the revenue has been dismissed. Respectfully, following the aforesaid decision, the questions are answered in favour of the assessee and against the revenue. The order of the Tribunal is upheld, appeal is dismissed

Summary

The High Court of Allahabad dismissed the appeal filed by the revenue regarding the character of ex-gratia/compensation receipt under V.R.S. as salary and the applicability of section 89(1) of the Income Tax Act. The Court held that benefits under Section 10(10-C) and 89 could be granted to the assessee. The Tribunal's view was upheld, and the appeal was dismissed.