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2018 (7) TMI 1731 - HC - Income TaxExemption under Section 10(10C) denied - Exemption claimed in revised return - Held that - Benefit applicable to all the public sector and other companies employees is applicable to the petitioner also. Section 10(10C) of the Act and Rule 2BA of the Income Tax Rules, 1962, do not specifically apply to RBI alone. Therefore, the benefit is applicable to the petitioner also. Further, the revisional authority has condoned the delay in filing the revised return. Circular No.14(XL35) of 1955, dated 11.04.1955 mandates that the tax payers have to be guided by the assessing officers in the matter of claims and reliefs. Only because an assessee files a return and pays excess tax, it is incumbent on the officials of the Income Tax Department much less the Assessing Authority to inform the reliefs entitled to the assessee. When the Income Tax Department has the power to demand payment of tax, where there is a deficit, it is equally a bounden duty to refund the payment of excess tax also. In such circumstances, the order refusing to refund the excess tax paid by the assessee is not sustainable. Accordingly, the impugned order passed by the first respondent in C.No.407/01/CIT-I/2009-10, dated 18.02.2011, is set aside and the respondents are directed to refund the excess amount, which the petitioner is entitled to, as per Section 10(10C) of the Income Tax Act, 1961.
Issues:
Challenge to rejection of exemption claim under Section 10(10C) of the Income Tax Act. Analysis: 1. The petitioner, an employee of ICICI Bank, opted for Early Retirement Optional Scheme and filed a revised return claiming exemption under Section 10(10C) of the Income Tax Act. However, the Assessing Officer rejected the revised return for non-compliance with filing provisions and completion of assessment under Section 143(1). 2. The petitioner filed a revision under Section 264 before the first respondent, claiming exemption under Section 10(10C). The issue revolved around the conformity of the Voluntary Retirement Scheme with Rule 2BA of the Income Tax Rules, 1962, which specifies conditions for exemption under Section 10(10C). 3. Different High Courts had conflicting views on the applicability of Section 10(10C) to voluntary retirement schemes. The Bombay High Court held in Commissioner of Income Tax vs. Koodathil Kallyatan Ambujakshan that the RBI's scheme qualified for exemption under Section 10(10C), a decision not appealed by the Income Tax Department. The Supreme Court also confirmed the eligibility of retiring RBI employees for exemption. 4. The Division Bench of the Madras High Court set a monetary limit for filing appeals based on a circular by the Central Board of Direct Taxes. In this case, the petitioner's tax effect was below the prescribed limit, rendering the appeal unnecessary. 5. The court emphasized that the petitioner was entitled to exemption under Section 10(10C) up to ?5,00,000, as established by previous judgments. The impugned order rejecting the exemption claim was deemed illegal and unsustainable. 6. Following the Supreme Court and Division Bench decisions, the court ruled in favor of the petitioner, directing the respondents to refund the excess amount due under Section 10(10C) of the Income Tax Act, 1961. The court highlighted the duty of the Income Tax Department to guide taxpayers on claims and reliefs, emphasizing the obligation to refund excess tax payments. 7. The judgment reiterated the applicability of Section 10(10C) and Rule 2BA to all public sector and other company employees, not limited to the RBI. The court's decision aligned with previous rulings and directed the refund of the excess amount to the petitioner. 8. Ultimately, the writ petition was allowed, setting aside the impugned order and directing the respondents to refund the excess amount due to the petitioner as per Section 10(10C) of the Income Tax Act, 1961. No costs were awarded in the case.
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