2023 (1) TMI 214 - AT - Income Tax

Admissible claim as envisaged u/s 10(1) u/s 10(10C) - excess relief claimed u/s 89 disallowed - CIT(A) by considering the relevant provision u/s 10(1) 10(10C) found that claim made by the assessee is genuine and based on bonafide ground even if the same could not be made in the return of income, further, directed the A.O. to allow the admissible claim as envisaged u/s 10(1) u/s 10(10C) of the Act. HELD THAT - In so far as issue of relief u/s 89 CIT(A) restricted amount of Rs. 2,41,874/- as relief, considering amended provisions of Section 89 Section 10(10C) of the Act, the said claim of the assessee is held to be not allowable. The Ld. CIT(A) has considered the amended provision to Section 10(10C) and Section 89 and further also considered CBDT Circular No. 20/2015 which is w.e.f. 01/04/2010 with insertion of proviso to Section 89, wherein no exemption shall be allowed to the assessee if any relief has been allowed u/s 10(10C) of the Act for any Assessment Year in respect of the amount received or receivable on voluntarily retirement or termination of service. Considering the above facts that the assessee could not claim relief u/s 10 (10B) at the time of filing of return which has been ultimately resulted in passing the order impugned, in our considered view, if the assessee be given the benefit of exemption u/s 10 (10B) of the Act and no other Exemption under Chapter III is allowed, the substantial justice would be rendered. Therefore, we direct the A.O. to give the exemption u/s 10 (10B) of the Act in accordance with law. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues Involved:
1. Disallowance of relief claimed under Sec 89(1)
2. Disallowance of compensation received as ONE TIME SETTLEMENT
3. Restriction on total deduction allowed by the AO
4. Interpretation of CBDT Circular No.8/2019

Detailed Analysis:
Issue 1: Disallowance of relief claimed under Sec 89(1)
The appellant contested the disallowance of relief under Sec 89(1) by the CIT(A), arguing that the relief was wrongly disallowed and that the CIT(A) erred in violating principles of natural justice. The appellant claimed that the amount disallowed was a lump sum settlement for future service under a Voluntary Separation Scheme, approved by the Government of India. The appellant argued that the scheme was not truly voluntary due to the inclusion of a clause threatening retrenchment under the Industrial Disputes Act, 1947 for non-participants. The appellant also highlighted the computation method used for the one-time settlement. The tribunal considered these arguments and directed the AO to allow the exemption under Sec 10(10C) of the Act, thereby granting relief to the appellant.

Issue 2: Disallowance of compensation received as ONE TIME SETTLEMENT
The appellant raised concerns regarding the taxability of the ONE TIME SETTLEMENT received in AY 2016-17, arguing that the lump sum compensation should be exempt based on the CBDT Circular No.8/2019. The tribunal analyzed the amendment to Sec 28 of the Income-tax Act, which expanded the scope of taxable compensation receipts in connection with business or employment. The tribunal noted that the amendment was effective from 1st April 2019 and applied to subsequent assessment years. The tribunal concluded that the appellant should be granted 100% exemption for the ONE TIME SETTLEMENT, considering the circumstances and the applicable law.

Issue 3: Restriction on total deduction allowed by the AO
The dispute over the total deduction allowed by the AO was addressed by the tribunal, which reviewed the computations and claims made by the appellant. The tribunal noted discrepancies in the relief claimed under Sec 89 and Sec 10(10C) of the Act. After careful consideration, the tribunal directed the AO to grant the exemption under Sec 10(10C) in accordance with the law, thereby allowing the relief sought by the appellant.

Issue 4: Interpretation of CBDT Circular No.8/2019
The tribunal analyzed the interpretation of CBDT Circular No.8/2019, which amended the provisions related to compensation receipts in connection with business or employment. The tribunal considered the impact of the circular on the appellant's case and concluded that the appellant should be granted the exemption based on the relevant provisions and the effective date of the amendment. The tribunal's decision aimed to ensure substantial justice for the appellant.

In conclusion, the tribunal allowed the appeal for statistical purposes, granting relief to the appellant on the issues raised regarding disallowances and exemptions under the Income-tax Act.