9911796707
TMI Blog1984 (11) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntarily retired from the service of the company on 2-4-1980 after twenty-eight years of continuous service. In the normal course, his retirement would have taken place only on 1-4-1985 subject to his having been found fit on 1-4-1983, fit to continue for two more years. In consideration of his voluntary retirement and in pursuance of a scheme evolved by the company in this behalf and the practice followed in similar cases, the assessee was paid a sum of Rs. 31,088. The assessee claimed that only one-third of this amount was assessable in each of the financial years 1980-81 to 1982-83. The ITO, after referring to the certificate issued by the company in this behalf, which is in the following terms, held that relief under section 89(1), r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled against this order to the AAC. The submissions made in this behalf before the AAC may be summarised hereunder. The compensation paid to the employee at the time of his retirement was nothing but profits in lieu of salary covered by section 17(1)(iv) of the Act. Profits in lieu of salary have been defined in clause (3) to include "the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or in modification of the terms and conditions relating thereto;". Section 89(1) provides for relief in respect of a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, by virtue of the inclusion of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being absolutely no basis to hold that the termination referred to both in clause (3) of section 17 and clause (c) of sub-rule (1) of rule 21A should have been at the instance of the employer and not as a result of voluntary retirement. He held that the word 'termination' would cover a case of voluntary retirement as well before the date of superannuation. Accordingly, he directed the ITO to allow relief under section 89(1), read with rule 21A(1)(c), as applied in sub-rule (4)(a)/(b). 5. Aggrieved with this decision of the AAC the department is in appeal before us. The submissions made on behalf of the revenue are as under : No appeal has been provided under section 246 of the Act against the refusal of the ITO to allow relief under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. After a careful consideration of the submissions, we are of the opinion, that the AAC was justified in entertaining the appeal and directing the ITO to allow the relief admissible under section 89(1), read with rule 21A. As regards the maintainability of the appeal, we have simply to refer to section 246, which in clause (c) of sub-section (1) indicates that an assessee, objecting to the amount of income assessed or to the amount of tax determined, may file an appeal to the AAC. Section 89 clearly lays down that relief is admissible in a case where income is assessed at a rate higher than that at which it would otherwise have been assessed. Since the rate applied is a determining factor of the amount of tax determined, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Dictionary by K.J. Aiyer, Eighth edn., 1980, as follows : " The expression in ordinary parlance may include termination for misconduct. But in the light of rules and prevailing practice, the meaning of that word has come to be restricted to contractual termination unconnected with any idea of punishment for misconduct. " [Emphasis supplied] From the above, it is clear that the termination should be as a result of contract and it has absolutely no connection with the idea of punishment or misconduct, which would be the case in the event of a termination by the employer. In the present case, the termination was as a result of voluntary retirement brought about in pursuance of a scheme of voluntary retirement, which, in other words, is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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