2021 (1) TMI 377 - HC - Income Tax

Entitled to claim deduction u/s 10 (10 C) (viii) and also under Section 89 (1) - amounts received as part of VRS - appellant admittedly took voluntary retirement - whether the amounts received by the petitioner under the Voluntary Retirement Scheme can be brought to tax under the Income Tax Act? - petitioner had filed return initially but he was issued with an intimation under Section 143(1) denying the relief under Section 89(1) - There was another intimation under Section 154 declining to revise the assessment - petitioner approached the Commissioner of Income Tax under Section 264 the said relief was declined - HELD THAT - When the case is taken up today, learned counsel for the respondents reiterated the contention that Ext.P4 order cannot be found fault since the Officer has acted only in accordance with law when he rejected the rectification application, for the reason that it was filed after the decision of the jurisdictional High Court in favour of the assessee. At the same time, it is conceded that the intimations under Sections 143 and 154 were appealable under Section 246(A) of the Income Tax Act and appropriate remedy for the petitioner was to move an appeal. The writ petition is hence disposed of permitting the petitioner to file an appeal against the intimation dated 20.12.2001 under Section 143(1) and intimation dated 31.12.2003 under Section 154 within a period of three weeks from today. If such an appeal is filed, the same shall be treated as an appeal filed within time and concerned authority shall dispose of the same on merits.

Summary

Issues:
1. Whether the amounts received by the petitioner under the Voluntary Retirement Scheme can be brought to tax under the Income Tax Act.
2. Validity of the denial of relief under Section 89(1) of the Income Tax Act.
3. Legality of rejecting the rectification application filed by the petitioner.
4. Applicability of appeal provisions under the Income Tax Act in the given circumstances.

Analysis:
1. The main issue in this case pertains to whether the amounts received by the petitioner under the Voluntary Retirement Scheme are taxable under the Income Tax Act. The petitioner sought relief under Section 89(1) of the Act, but the relief was initially denied through intimation under Section 143(1) and a subsequent intimation under Section 154. The Commissioner of Income Tax declined relief under Section 264 as well. The Income Tax Department raised a demand on the petitioner for arrears of tax. The court noted that the petitioner's appropriate remedy was to file an appeal against the intimation dated 20.12.2001 and 31.12.2003 within three weeks.

2. The denial of relief under Section 89(1) was a crucial aspect of the case. The Commissioner, through orders Ext.P1 and Ext.P4, declined the relief despite acknowledging the legal position favored the petitioner. However, the Commissioner cited procedural reasons for not granting the relief, stating that a rectification application filed after a High Court decision could not be maintained. The court directed the petitioner to file an appeal against the intimation within the specified timeline, treating it as filed within the stipulated period.

3. The legality of rejecting the rectification application filed by the petitioner was also contested. The respondents argued that the Officer acted in accordance with the law by rejecting the rectification application post the High Court's decision in favor of the assessee. While the court acknowledged this contention, it emphasized that the petitioner's recourse was to appeal the intimation under the Income Tax Act. The court disposed of the writ petition by allowing the petitioner to file an appeal against the intimation within the specified timeframe.

4. The judgment highlighted the importance of adhering to the appeal provisions under the Income Tax Act. It underscored that the appropriate course of action for the petitioner was to file an appeal against the intimation rather than seeking relief through a rectification application. By permitting the petitioner to file an appeal within three weeks, the court ensured that the appeal would be treated as filed within the statutory time limit, and the concerned authority was directed to decide on the appeal's merits accordingly.