2015 (6) TMI 29 - AT - Income Tax

Entitlement to exemption under section (10)(10C) - Held that - As per section 10(10C), the scheme is to be framed as per the guidelines as may be prescribed. Further a perusal of the heading of rule 2BA shows that it prescribes the guidelines for the purpose of section 10(10c). The guidelines, as its nomenclature suggests, are just for the purpose of guidance, while framing the scheme of voluntary retirement by the institutes/companies and cannot be said to be mandatory in nature but only procedural or guiding in nature. If the scheme as a whole, otherwise in accordance with the provisions of section 10(10C) and as per the guidelines under rule 2BA except as to some departures from the guidelines, but not in violation of the guidelines as a whole or of the provisions of section 10(10C), its object and purposes, then, in such an event, merely because the scheme differs at one or two points from the guidelines is not sufficient to deny the benefits granted under the section 10(10C) to an employee in view of the beneficial nature of the provision keeping in view the purpose and object sought to be achieved through such a provision. We, therefore, are of the view that denial of exemption to the assessee only because he has received compensation on his retirement a little more than the limit prescribed by rule 2BA, will be against the spirit of the provisions of the section 10(10C), especially, when no such limit has been prescribed under section 10(10C) and also in view of our observations that provisions of rule 2BA are not mandatory but in the shape of guidelines which are to be taken into consideration while framing the scheme The assessees are entitled to exemption under section (10)(10C) of the Act up to the amount of ₹ 5 lakhs as provided under the relevant provisions as provided of the said section - Decided in favour of assesse.

Summary

Issues:
Delay in filing appeals, entitlement of exemption under section 10(10C) of the Income Tax Act.

Delay in Filing Appeals:
The three assessees filed appeals with a delay of 260 days, citing identical reasons for the delay. They believed that the decision in the appeal of another colleague would apply to their cases. However, they were informed that separate appeals needed to be filed. The assessees, retired senior citizens, were under a genuine belief causing the delay. The Tribunal condoned the delay considering the circumstances and reasoning provided by the assessees.

Entitlement of Exemption under Section 10(10C):
The dispute revolved around the entitlement of exemption under section 10(10C) of the Act. The Tribunal referred to a previous case where the claim for exemption under identical circumstances was allowed. The Tribunal analyzed the provisions of section 10(10C) and rule 2BA, emphasizing a liberal interpretation of the beneficial provisions. It was noted that the guidelines under rule 2BA were procedural and not mandatory, meant for guidance while framing the scheme. The Tribunal held that denial of exemption based solely on exceeding the limit prescribed by rule 2BA would go against the spirit of section 10(10C). Consequently, the Tribunal allowed the appeals, stating that the assessees were entitled to exemption under section 10(10C) up to the specified amount.

Conclusion:
The Tribunal allowed all the appeals of the assessees, holding that they were entitled to exemption under section 10(10C) of the Act. The decision was based on the liberal interpretation of the provisions and the procedural nature of the guidelines under rule 2BA. The Tribunal considered the circumstances leading to the delay in filing the appeals and condoned the delay in light of the assessees' genuine belief.