2009 (3) TMI 56 - HC - Income Tax

Whether the amount paid to assessee-employee under the Voluntary Retirement Scheme is entitled for deduction - assessee has filed a return of income claiming exemption under Section 10(10C) and also relief under Section 89(1) question is answered in affirmative in favour of assessee revenue appeal is dismissed

Summary

Issues:
1. Entitlement of amount paid to employees under Voluntary Retirement Scheme for deduction.

Analysis:
The High Court of Madras heard a Tax Case Appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal regarding the entitlement of the amount paid to employees under the Voluntary Retirement Scheme for deduction. The assessee, an employee of the State Bank of India, retired under the said scheme during the relevant assessment year. The ex-gratia received by the assessee was claimed as an exemption under Section 10(10C) of the Income Tax Act, and the balance was treated as income. Additionally, the assessee claimed relief under Section 89(1) of the Act while computing the tax payable. The Assessing Officer rejected this claim, leading to an appeal by the assessee before the Commissioner of Income Tax (Appeals), who allowed the appeal. Subsequently, the Revenue appealed to the Income Tax Appellate Tribunal, which upheld the decision of the CIT(A). The Revenue then filed the present appeal before the High Court.

The learned Standing Counsel for the Revenue acknowledged that the issue in this appeal was similar to a previous decision of the Court in the case of COMMISSIONER OF INCOME TAX VS. G.V. VENUGOPAL, where the Court had ruled in favor of the assessee. The Court, after considering the precedent and the facts of the case, concluded that the Tribunal was correct in following the previous judgment and dismissed the appeal filed by the Revenue. The Court found no error or illegality in the Tribunal's order and determined that no substantial question of law arose for consideration. Consequently, the Tax Case Appeal was dismissed without any costs being awarded.

In summary, the High Court of Madras upheld the decision of the Income Tax Appellate Tribunal regarding the deduction of the amount paid to employees under the Voluntary Retirement Scheme. The Court relied on a previous judgment to support its decision and found no grounds to overturn the Tribunal's ruling.