1981 (10) TMI 58 - AT - Income Tax

Summary

Issues:
1. Taxability of payments received under Voluntary Separation Scheme.
2. Assessment of payments in one year or spread over multiple years.
3. Determination of whether the assessee qualifies as a workman under the Industrial Disputes Act and if the received amount can be considered as compensation for retrenchment.

Analysis:
1. The dispute revolved around payments received by the assessee under a Voluntary Separation Scheme upon retirement from I.B.M. World Trade Corporation. The assessee claimed the payment was exempt under section 10(10B) of the IT Act. However, the Income Tax Officer (ITO) contended that the payment was for voluntary retirement and not compensation for retrenchment, thus taxed the aggregate amount in one year. The CIT(A) disagreed, stating each installment should be taxed in the year received. The Tribunal agreed with the CIT(A) that the terms of voluntary retirement did not support the department's argument, and only the installment received in a particular year should be assessed.

2. The next issue concerned the CIT(A)'s direction to the ITO to consider the assessee's claim for relief under section 89. The Tribunal noted that the CIT(A) did not make a decision but directed the ITO to decide as per law, hence declined to interfere.

3. The final issue was whether the assessee could be classified as a workman under the Industrial Disputes Act and if the received amount could be treated as retrenchment compensation. The Tribunal found insufficient evidence on record to determine the nature of the duties performed by the assessee and if they qualified as a workman. The matter was remanded to the CIT(A) to examine additional evidence and determine if the assessee could be considered a workman and if the received amount constituted retrenchment compensation. The Tribunal emphasized the importance of considering Supreme Court decisions and the Labour Court decision relied upon by the assessee in this regard.

In conclusion, the Tribunal dismissed the departmental appeal and allowed the assessee's appeal for statistical purposes. The judgment highlighted the need for a thorough examination of the evidence to determine the taxability of payments, the assessment timeline, and the classification of the assessee as a workman under the Industrial Disputes Act.