2018 (11) TMI 270 - HC - Income Tax

Entitlement to exemption u/s 10(10(c) - Voluntary retirement scheme - terminal benefits received by the appellant at the time of voluntary retirement under the Early Retirement Option(ERO) 2003, Scheme - Held that - Substantial Question of Law was considered in the case of Smt.Kalyani Santhanam -vs- The Income Tax Officer, Ward(2), Tambaram, Chennai-600 045 2018 (11) TMI 135 - MADRAS HIGH COURT wherein as decided in view of circular dated 8-5-2009, revenue agreed to allow the benefit of deduction to the appellants under section 10(10C) of the Income-tax Act, 1961, as far as the retired employees of the Reserve Bank of India are concerned. - Exemption u/s 10(10C) allowed - Decided in favour of assessee.

Summary

Issues:
1. Appeal against order by Income Tax Appellate Tribunal regarding exemption under Section 10(10(c)) of the Income Tax Act for terminal benefits received upon voluntary retirement.

Analysis:
The judgment involves an appeal by the Revenue against the order of the Income Tax Appellate Tribunal regarding the exemption under Section 10(10(c)) of the Income Tax Act for terminal benefits received upon voluntary retirement. The substantial question of law in this case was whether the appellant is entitled to exemption under Section 10(10(c)) in respect of terminal benefits received upon voluntary retirement under the Early Retirement Option Scheme of the employer for the assessment year 2004-05. The Division Bench considered a similar issue in a previous case and ruled in favor of the assessee, allowing the exemption under Section 10(10C) of the Act. The judgment of the Hon'ble Supreme Court in a related case further supported the allowance of the exemption for retiring employees of the Reserve Bank of India under the Income Tax Act.

The Division Bench's decision in a previous case favored the assessee, allowing the exemption under Section 10(10C) of the Act for terminal benefits received upon voluntary retirement. The Hon'ble Supreme Court's judgment in a related case supported the allowance of the exemption for retiring employees of the Reserve Bank of India under the Income Tax Act. The Court noted that a subsequent circular by the Central Board of Direct Taxes clarified that retiring employees of the RBI were eligible for exemption under the provisions of the Income Tax Act. As a result, the appeals succeeded, the impugned order was set aside, and the Tribunal's decision was restored, with no order as to costs.

In conclusion, the judgment upheld the assessee's entitlement to the exemption under Section 10(10C) of the Income Tax Act for terminal benefits received upon voluntary retirement. The appeal filed by the assessee was allowed, the Tribunal's order was set aside, and the substantial question of law was answered in favor of the assessee. The decision was in line with the previous ruling and the clarification provided by the Central Board of Direct Taxes regarding the eligibility of retiring RBI employees for exemption under the Income Tax Act.