2013 (6) TMI 519 - AT - Income Tax

Deduction under section 10(10C) disallowed - assessee under the VRS Scheme of State Bank of India received sum on account of ex-gratia payments - Held that - The issue is covered by the ratio laid down in Shri Bikram Jit Passi v. DCIT 2012 (11) TMI 214 - ITAT, CHANDIGARH wherein similar claim in the hands of another ex-employee of State Bank of India was allowed - in favour of assessee. Claim of exemption under section 10(5) - leave travel package covered Singapore and Malaysia - Held that - Reading of section 10(5) and Rule 2B of the Rules in conjunction lays down the guidelines for claiming exemption in relations to the travel concession received by an employee from his employer or former employer, for proceeding on leave to any place in India. The person is to undertake the journey to any place in India and thereafter return to the place of employment and is entitled to reimbursement of expenditure on such travel between the place of employment and destination in India. Rule 2B of the Rules further lays down the conditions that the amount to be allowed as concession is not to exceed the air economy fair of the National Carrier by the shortest route to the destination in India. The said condition in no way provides that the assessee is at liberty to claim exemption out of his total ticket package spent on his overseas travel and part of the journey being within India. No merit in the claim of the assessee in the present case - Against assessee.

Summary

Issues Involved:
1. Appeal against order of Commissioner of Income Tax (Appeals)
2. Claim of deduction under section 10(10C) of the Income Tax Act
3. Claim of deduction under section 10(5) of the Income Tax Act

Issue 1: Appeal against order of Commissioner of Income Tax (Appeals):
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals), Chandigarh dated 20.07.2011, concerning the order passed under section 143(3) of the Income Tax Act, 1961. The general ground raised by the assessee was dismissed.

Issue 2: Claim of deduction under section 10(10C) of the Income Tax Act:
The assessee claimed a deduction under section 10(10C) for ex-gratia payments received under the VRS Scheme of State Bank of India. The claim was rejected by the Assessing Officer and the CIT (Appeals). However, the Tribunal directed the Assessing Officer to allow the deduction based on a precedent set in a similar case, thereby allowing the claim.

Issue 3: Claim of deduction under section 10(5) of the Income Tax Act:
The dispute arose regarding the claim of deduction under section 10(5) of the Act for leave travel concession (LTC) amounting to Rs. 1,19,227. The Assessing Officer disallowed the claim as the tour included overseas travel. The CIT (Appeals) upheld this decision, citing that the exemption is not allowable for travel outside India as per the Act and relevant rules. The Tribunal concurred, emphasizing that the exemption is only applicable for travel within India as per the Act and Rule 2B of the Income Tax Rules. The claim for exemption under section 10(5) was thus dismissed, restricting the taxable amount to Rs. 1,19,227.

In conclusion, the Tribunal partially allowed the appeal, granting the deduction under section 10(10C) but dismissing the claim for deduction under section 10(5) of the Income Tax Act.