2012 (11) TMI 386 - AT - Income Tax

Denial of exemption under section 10(10C) - rectification u/s 154 - amount received by the appellant under the VRS scheme Held that - No doubt in a normal situation, so far as matters capable of two views being taken will be outside the ambit of section 154. However, right now, we are dealing with interpretation of section 10(10C) and so far as this interpretation is concerned, law laid down by Hon ble Calcutta High Court is that an interpretation in favour of the assessee is to be adopted. The real question, therefore, is whether or not these decisions of Hon ble jurisdictional High Court can be subject matter of rectification under section 154. The Assessing Officer disregarded Hon ble jurisdictional High Court in the case of SAIL DSP VR Employees Association, 1998 (2003 (2) TMI 46 - CALCUTTA HIGH COURT ), on the ground that this issue has already been decided in assessment order and, therefore, it cannot be reconsidered, even in the light of Hon ble jurisdictional High Court s decision. learned CIT(A), on the other hand, referred to an aspect of the said decision. In our considered view, what ought to have been examined by the Assessing Officer was whether, in the light of the principles laid down by Hon ble jurisdictional High Court, the interpretation canvassed by the assessee could be accepted as one of the possible views of the matter. That exercise has not been done. - AO directed to give relief. - Decided in favor of assessee.

Summary

Issues:
Interpretation of section 10(10C) for deduction under the Voluntary Retirement Scheme.

Analysis:
The appeal concerns the correctness of the Commissioner of Income Tax (Appeal)'s order regarding the deduction under section 10(10C) for the assessment year 2004-05. The appellant, a former employee of a bank, received an amount under the Voluntary Retirement Scheme and claimed a deduction of Rs. 5,00,000 under section 10(10C). The Assessing Officer denied the claim as the amount received exceeded the permissible limit under Rule 2BA. The appellant filed a rectification petition under section 154, citing a judgment of the jurisdictional High Court supporting their claim. The Assessing Officer rejected the petition, stating that the issue was already decided in the assessment order. The Commissioner upheld this decision, relying on the judgment of the High Court in a different case. The appellant contended that the judgment supported their claim and that the provisions of section 10(10C) should be interpreted in their favor.

The Tribunal considered the legal position as laid down by the jurisdictional High Court in a previous case involving a similar issue. The High Court had emphasized interpreting section 10(10C) in a manner beneficial to the employee opting for voluntary retirement in case of ambiguity. Additionally, a Third Member decision of the Tribunal in another case supported the eligibility for deduction under section 10(10C) even if the voluntary retirement scheme did not conform to Rule 2BA. The Tribunal held that the Assessing Officer should have considered the possible interpretation in favor of the assessee based on the High Court's guidance. The Supreme Court's ruling further supported that non-consideration of a judgment of the jurisdictional High Court constitutes a mistake apparent on record, rectifiable under section 154.

Consequently, the Tribunal allowed the appeal, vacated the lower authorities' orders, and directed the Assessing Officer to grant the relief of deduction under section 10(10C). The decision in this case was deemed applicable to all other similar appeals. The judgment emphasized the importance of interpreting tax provisions favorably for employees opting for voluntary retirement and highlighted the significance of considering relevant judicial precedents in making such determinations.