2018 (11) TMI 135 - HC - Income Tax

Exemption u/s 10(10C) - Voluntary retirement scheme - amount received under the OERS of the Reserve Bank of India - assessee in the Reserve Bank of India and took Voluntary Retirement under the Optional Early Retirement Scheme (OERS), framed by the Reserve Bank of India - Held that - This very issue was considered by the Hon ble Supreme Court in the case of Chandra Ranganathan vs. Commissioner of Income Tax 2009 (10) TMI 498 - SUPREME COURT OF INDIA wherein as held in view of circular dated 8-5-2009, revenue agreed to allow the benefit of deduction to the appellants under section 10(10C) of the Income-tax Act, 1961, as far as the retired employees of the Reserve Bank of India are concerned. - Exemption u/s 10(10C) allowed - Decided in favour of assessee.

Summary

Issues:
Interpretation of Section 10(10C) of the Income Tax Act, 1961 regarding exemption for compensation received under the Optional Early Retirement Scheme (OERS) of the Reserve Bank of India.

Analysis:
The case involved an individual who took voluntary retirement under the OERS of the Reserve Bank of India and claimed exemption under Section 10(10C) of the Income Tax Act for the compensation received. The Assessing Officer initially denied the exemption based on certain conditions not being fulfilled. However, the Hon'ble Supreme Court, in a similar case, allowed the appeal stating that amounts received by retiring employees of the RBI would be eligible for exemption under the Act. This decision was based on a circular issued by the Central Board of Direct Taxes, which clarified the eligibility of retired RBI employees for the exemption under Section 10(10C).

The judgment highlighted that the subsequent circular from the Central Board of Direct Taxes, based on a judgment of the Bombay High Court, confirmed that retired RBI employees were indeed eligible for the exemption under Section 10(10C) of the Income Tax Act. Consequently, the appeals were allowed, setting aside the High Court's order and restoring that of the Tribunal, with no order as to costs. The appellant in this case was deemed entitled to succeed based on the Supreme Court's decision, and the appeal was allowed in favor of the assessee.

In conclusion, the judgment clarified the interpretation of Section 10(10C) of the Income Tax Act regarding the exemption for compensation received under the OERS of the Reserve Bank of India. It emphasized the importance of circulars and court decisions in determining the eligibility of retired RBI employees for such exemptions, ultimately leading to the allowance of the appeal in favor of the assessee.