2020 (5) TMI 18 - AT - Income Tax

Condonation of delay of delay of 88 days - legitimate reasons of delay - HELD THAT - As stated that the assessee was suffering from spondylisis. Due to court vacations and owing to the extremely busy schedule of the advocate engaged by the assessee, he was able to fix an appointment with him only during the 2nd week of June - said advocate was hesitant in accepting the brief as he was already preoccupied with certain other matter. Being not well versed with the tax laws, the assessee engaged another advocate who prepared the appeal papers by the end of July. Due to natural calamities in August, there was communication gap between the assessee and the advocate. Finally, the appeal was filed on 19/09/2018. Due to aforesaid reasons, there was delay of 88 days in filing the appeal - there are no wilful latches or negligence in not filing the appeal within the statutory time limit and the delay was occurred due to genuine, compelling, bonafide and legitimate reasons - delay in filing of the appeal cannot be attributable to any latches on the part of the assessee, hence we condone the delay of 88 days Deduction u/s. 10(10C) disallowed - schemes of voluntary retirement of companies or authorities governing the payment of sums - last four conditions mentioned in Rule 2BA of I.T. Rules, 1962, has not been satisfied in this case - HELD THAT - In the instant case, the assessee has failed to produce certificate from the employer (SBI) stating that the exit option scheme is eligible for benefit of exemption u/s. 10(10C) and is in accordance with the guidelines formulated in Rule 2BA of the I.T. Rules. On the contrary, the certificate issued by the State Bank of India (employer of the assessee) along with the return of income in respect of the above scheme has clearly mentioned that the amount of ex gratia would be added to the total income of the employee for the year and income tax would be recovered at the applicable rate at source. The employer-Bank (SBI) has also deducted tax at source including the ex gratia granted to the employee at the time of retirement. In the certificate also, the retirement scheme is mentioned as exit option scheme and there is no reference regarding fulfilment of conditions prescribed under Rule 2BA of the I.T. Rules, 1962 which stipulates the criteria for exemption u/s. 10(10C) Employer has deducted tax at source u/s. 192 of the I.T. Act on ex-gratia amount received and the employer has not vouched that the conditions mentioned under Rule 2BA has been cumulatively satisfied. Thus the assessee is not entitled to the benefit of exemption u/s.10(10C) - Decided against assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Justification of the CIT(A) in confirming the Assessing Officer's disallowance of the claim of deduction under Section 10(10C) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:

The appeal was filed with a delay of 88 days. The assessee submitted a petition for condonation of delay, supported by an affidavit explaining the reasons. The affidavit cited the assessee's health issues (spondylosis), court vacations, the busy schedule of the initially engaged advocate, and natural calamities as reasons for the delay. The assessee argued that the delay was due to genuine, compelling, bona fide, and legitimate reasons, and not due to any willful neglect. The Tribunal, after considering the reasons, found that the delay was not attributable to any negligence on the part of the assessee and thus condoned the delay, allowing the appeal to be heard on merits.

2. Justification of the CIT(A) in Confirming the Assessing Officer's Disallowance of Deduction under Section 10(10C):

Facts of the Case:
The assessee, an employee of the State Bank of India (SBI), retired under the "Exit Option Scheme" effective from 30/06/2007 and claimed a deduction of ?5 lakhs under Section 10(10C) of the Income Tax Act for the assessment year 2008-09. The Assessing Officer (AO) disallowed the claim based on CBDT Circular No. F.No.200/34/2009-ITA-1 dated 06/10/2009, which stated that employees availing exit option schemes are not eligible for exemption under Section 10(10C). The AO noted that the assessee failed to satisfy all six conditions under Rule 2BA of the Income Tax Rules, 1962, particularly the last four conditions which require certification from the employer.

CIT(A) Findings:
The CIT(A) upheld the AO's decision, emphasizing that the assessee did not provide sufficient evidence to prove eligibility under Section 10(10C). The CIT(A) noted that judicial decisions cited by the assessee were based on specific facts of those cases and did not apply universally. The CIT(A) also pointed out that the circular issued by CBDT applied to all assessees availing exit option schemes, regardless of the date of retirement.

Tribunal's Analysis:
The Tribunal reviewed the relevant provisions of Section 10(10C) and Rule 2BA, which outline the conditions for exemption. It reiterated that compliance with all conditions is mandatory. The Tribunal noted that the assessee failed to produce a certificate from SBI confirming that the exit option scheme met the criteria under Rule 2BA. The Tribunal also referenced the CBDT Circular No. 640, which clarified that only schemes meeting all conditions under Section 10(10C) and Rule 2BA qualify for exemption, and in such cases, employers need not deduct tax at source. The Tribunal cited the case of State Bank of Mysore vs. CIT, which held that compliance with Rule 2BA is mandatory, a decision upheld by the Karnataka High Court.

Judicial Precedents:
The Tribunal distinguished the case from the Supreme Court's decision in Chandra Ranganathan & Others vs. CIT, where the voluntary retirement scheme of RBI was later recognized under Rule 2BA. It also differentiated from the Bombay High Court's decision in CIT vs. Koodathil Kallyatan Ambujakshan and the Karnataka High Court's decision in CIT & Another vs. Appasaheb Baburao Lambe, noting that in those cases, the schemes were recognized under Rule 2BA, and all conditions were satisfied.

Conclusion:
The Tribunal concluded that the assessee did not meet the conditions for exemption under Section 10(10C) as the employer did not certify compliance with Rule 2BA. Consequently, the appeal was dismissed, and the assessee was not entitled to the claimed exemption.

Result:
The appeal of the assessee was dismissed.