2016 (2) TMI 823 - AT - Income Tax

Rectification application u/s 154 to claim exemption - Entitlement to the benefit of deduction u/s.10(10C) - RBI employees retiring under OERS - Held that - The issue whether deduction u/s.10(10C) of the Act should be allowed to RBI employees retiring under OERS is no longer res integra and has been concluded in several decisions including the decision in the case of CIT Vs. Koodathil Kaliyatan Ambujakshn (2008 (7) TMI 259 - BOMBAY HIGH COURT). In fact the CBDT in Instruction dated 8.5.2009 has accepted this decision and opined that employees of RBI who accepted OERS would be entitled to the benefit of Sec.10(10C) of the Act. In view of the above, we hold that the claim for deduction u/s.10(10C) of the Act has to be allowed to the Assessee. The fact that the Assessee voluntarily offered the sum in question to tax cannot be the basis to sustain the levy of tax. Therefore hold that there was a mistake apparent on the face of the record and the application u/s.154 of the Act filed by the Assessee ought to be allowed. Thus direct the AO to allow deduction accordingly. - Decided in favour of assessee

Summary

Issues:
1. Claim for exemption u/s.10(10C) of the Income Tax Act, 1961 by an employee who opted for Voluntary Retirement under OERS.
2. Delay in filing appeal before the Tribunal by the Assessee.

Analysis:

Issue 1: Claim for exemption u/s.10(10C) of the Income Tax Act, 1961
The assessee, an employee of RBI who opted for Voluntary Retirement under OERS, received a sum on retirement and claimed exemption u/s.10(10C) of the Act. The Revenue initially disallowed this claim, leading to the assessee withdrawing the claim in response to a notice u/s.148. Subsequently, realizing that colleagues received similar deductions successfully, the assessee sought legal recourse. The Tribunal noted that the conditions under Sec.10(10C) were not satisfied as per the rules framed, but various judicial precedents supported allowing the deduction to RBI employees under OERS. Citing the CBDT's instruction and previous decisions, the Tribunal held that the assessee was entitled to the benefit of deduction u/s.10(10C) of the Act. The delay in filing the appeal was condoned, and the Tribunal directed the AO to allow the deduction.

Issue 2: Delay in filing appeal before the Tribunal
The assessee filed an affidavit explaining the reasons for the delay in filing the appeal, citing health issues, family circumstances, and negligence by representatives. The Tribunal considered the reasons and emphasized the principle of substantial justice over technicalities. Referring to Supreme Court cases, the Tribunal highlighted that the delay should be condoned if the very liability of the assessee was non-existent. Given the circumstances and the entitlement to the deduction, the Tribunal concluded that the delay in filing the appeal should be condoned. The appeal was allowed, and the AO was directed to grant the deduction u/s.10(10C) of the Act to the assessee.

In conclusion, the Tribunal allowed the appeal, condoned the delay in filing, and directed the AO to grant the deduction u/s.10(10C) of the Act to the assessee who opted for Voluntary Retirement under OERS from RBI.