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2020 (10) TMI 777 - HC - Income TaxGrant of relief u/s 89 - Relief when salary, etc., is paid in arrears or in advance - AO jurisdiction of the matter for the grant of relief - Retirement and pension benefits withheld - proceedings pending against the petitioner before the Railway Authority - petitioner submitted a request to not deduct income tax on the amount by treating it as income of the current year, to spread over/ distribute the payment over the period, under Section 89 of the I-T Act read with Rule 21A (2)(d) of the I-T Rules - Whether petitioner, being a senior citizen, was exempted from paying income tax in advance, under Section 207(2) ? - whether the SBI erred in not allowing the benefit of Section 89 while deducting TDS on a pension under Section 192 ? - whether this Court ought to direct the SBI or the I-T department to make a refund to the petitioner? - HELD THAT - Section 89 is plain and clear. It provides that it is for the Assessing Officer of income tax to grant the relief under the Section and on application made before him. We further see that the Hon'ble Apex Court has accepted this position in multiple cases. In the case of Sundaram Motors (P.) Ltd. v. Ameerjan 1984 (8) TMI 3 - SUPREME COURT awarded the petitioners with compensation in place of reinstatement. Holding that since the amount would be paid in lump sum, for payment of income tax, the benefit of spread over must be provided to the petitioners. Accordingly, the Court directed the employee to make a necessary application before the I-T Officer to claim relief under Section 89, and the officer to act immediately in disposing of the said application. On a reading of Section 192 (2A), we agree that the SBI should have computed the relief on the basis of the particulars and deducted income tax in accordance with Section 89. However, we see that the remedy of the undue deduction is provided under Section 89 of the I-T Act itself, where the assessee is required to apply to the Assessing Officer and avail relief under the Section. Accordingly, the petitioner is directed to make a required application to the Assessing Officer having jurisdiction of the matter for the grant of relief under Section 89 of the Act in accordance with the provisions of the statute. The SBI is directed to extend all assistance to the petitioner to enable him to avail such relief. We also hope and expect that the Assessing Officer of the income tax considers and dispose of the matter expeditiously and within a period of three months from the date of receipt of application.
Issues Involved:
1. Whether the State Bank of India (SBI) erred in not allowing the benefit of Section 89 of the Income Tax Act while deducting TDS on the petitioner's pension. 2. Whether the Court should direct SBI or the Income Tax Department to refund the deducted amount to the petitioner. 3. Whether the petitioner, being a senior citizen, was exempted from paying advance tax under Section 207 of the Income Tax Act. Detailed Analysis: 1. Whether the State Bank of India (SBI) erred in not allowing the benefit of Section 89 of the Income Tax Act while deducting TDS on the petitioner's pension: The petitioner argued that SBI failed to act under Section 89(1) and 192(2A) of the Income Tax Act, 1961 by not spreading over the arrears of pension amount paid in a lump sum and instead treating it as income for the current year. The petitioner had submitted the required details and Form 10E to claim relief under Section 89. Despite this, SBI deducted income tax from the pension as if it were the income of the current year. The petitioner contended that this deduction was illegal and arbitrary, as the spread-over method would have resulted in no tax deduction. SBI contended that the relief under Section 89 could only be granted by the Assessing Officer of income tax when the petitioner files his income tax return and makes an application under Section 89. Thus, the petitioner should have approached the I-T Department for a refund. The Court acknowledged that Section 192(2A) allows an assessee to furnish particulars to the person responsible for making the payment, who should then compute the relief and take it into account while deducting tax. However, the Court emphasized that the statutory remedy for undue deduction is provided under Section 89, where the assessee must apply to the Assessing Officer. 2. Whether the Court should direct SBI or the Income Tax Department to refund the deducted amount to the petitioner: The Court referred to multiple precedents, including Sundaram Motors (P.) Ltd. v. Ameerjan, Sant Raj v. O.P. Singla, and K.C. Joshi v. Union of India, where the Hon'ble Apex Court held that employees eligible for Section 89 relief must apply to the Assessing Officer to avail the benefit. The Court concluded that it is for the Assessing Officer of income tax to grant relief under Section 89, and the petitioner should have approached the relevant authority under the I-T Act. The Court also cited the Madhya Pradesh High Court case of Shantilal Bagora v. State Bank of Indore, which held that the statutory remedy under Section 89 must be pursued, and it is not for the writ Court to grant relief factually. The petitioner was directed to make the appropriate application before the Assessing Officer. 3. Whether the petitioner, being a senior citizen, was exempted from paying advance tax under Section 207 of the Income Tax Act: The petitioner argued that no tax was deductible for the assessment year 2016-2017 as he was a senior citizen exempted from paying advance tax under Section 207. The Court noted that to claim this exemption, the petitioner must follow the procedure established under the Act and submit the required form to the deductor. The Court was unsure whether this procedure was followed by the petitioner but allowed the petitioner to provide the necessary details and claim the exemption in the future. Conclusion: The Court directed the petitioner to apply to the Assessing Officer for relief under Section 89 of the I-T Act and instructed SBI to assist the petitioner in this process. The Court expected the Assessing Officer to dispose of the matter expeditiously within three months from the date of receipt of the application. The writ petition was disposed of with these observations and directions.
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