9911796707
TMI Blog2004 (1) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... ice . There is also no dispute about the factual position that as a result of the assessee s having received the aforesaid profit in lieu of salary his income is assessed at a rate higher than the rate at which it would otherwise have been assessed, it is also not in dispute that under rule 21A(1)(c) of the IT Rules. On these facts, in our considered view, the conditions laid down under section 89(1) are satisfied and, from this point of view, the assessee is eligible for relief. There is no dispute about the admissibility of exemption upto an amount of Rs. 5 lakhs, out of the sum received by the assessee under the VRS, u/s 10(10C). It provides that any amount received by an employee of any company at the time of his voluntary retirement, in accordance with the scheme of voluntary retirement, to the extent such amount does not exceed Rs. 5 lakhs. In our considered view, the implication of this proviso is only that in case an assessee is allowed an exemption u/s 10(10C) in one assessment year, such an assessee is not entitled to exemption u/s 10(10C) in any other assessment year. In other words, the benefit u/s 10(10C) is a one time benefit. As a matter of fact, it is difficult for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Co. Ltd. v. CIT [ 1986 (2) TMI 17 - KARNATAKA HIGH COURT] , by the Hon ble jurisdictional High Court. Thus, we are of the considered view that the assessee was indeed eligible for relief u/s 89(1) and merely because the assessee was allowed exemption u/s 10(10C), this relief could not have been declined to the assessee. Accordingly, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. In the result, Revenue s appeal is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant are being considered together for disposal. 3. Briefly, the material facts. The assessee was in employment of Union Bank of India, and, in the relevant previous year, the assessee received a sum of Rs. 7,50,592 as an ex gratia amount (i.e., VRS compensation) on account of leaving employment with the aforesaid Union Bank of India under Voluntary Retirement Scheme. While filing the income-tax return, the assessee claimed, inter alia, exemption of ex gratia amount to the extent of Rs. 5,00,000, under section 10(10C) of the Act, and also relief under section 89(1) in respect of ex gratia amount received in excess of Rs. 5,00,000. The assessee's claim was that the exemption for ex gratia amount received as VRS compensation was available upto Rs. 5,00,000 only, the balance amount was subject to normal taxability which, inter alia, meant admissibility of relief under section 89(1), if otherwise eligible. It was further pleaded that the requirements of section 89(1) as also rules 21A and 21AA were fully satisfied in his case. The Assessing Officer was, however, not impressed and he rejected the claim by observing as follows: "In this case, the assessee has opted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad.) 248/[1994] 206 ITR 531 (Mad.), it was held that 'the question as to whether the assessee is entitled to relief under section 89(1) would depend upon the interpretation to be placed on the words "termination of his employment" occurring in sub-section (3)(i) of section 17 of the IT Act. That being so, we are of the view that there is no justification to confine the meaning of the word "termination" only to the case of other voluntary retirement or superannuation, as per the stand taken by the Department. It must be borne in mind that section 89(1) read with section 17(3) of the IT Act are beneficial clauses intended to grant certain benefits to employees or persons in service. Therefore, if the meaning of the word "termination" is confined to cases of voluntary retirement or superannuation only, the object of the clause will not be fully achieved.... It may also be pointed out that if the ex gratia amount received by the assessee by reason of his resignation from employment is not held as falling under clause (3) of section 17 of the Act, it cannot also be construed as income amenable to assessment to income-tax because it is not the amount e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee can claim exemption under section 10(10C) only once in his life time and no one can claim the same exemption on receipt of compensation or otherwise in future. Accordingly, in my opinion, the Assessing Officer is not justified in denying the relief under section 89(1) of the IT Act to the appellant. The Assessing Officer is directed to compute the total income of the appellant by allowing appropriate relief under section 89(1) of the Income-tax Act, 1961." Revenue is aggrieved of the aforesaid order of the CIT(A) and is in appeal before us 4. Shri Maneesh Bahuguna, learned Departmental Representative, strongly relied upon the order of the Assessing Officer and submitted that the judgments of Hon'ble Madras High Court, which were relied upon by the CIT(A) were based on entirely different sets of facts and law existing prior to introduction of Voluntary Retirement Scheme in the year 1987. It was submitted that "these cases were unique and isolated incidences of income and facts of assessee's case differ from it" and that "the provisions contained in section 10(10C) and the present voluntary retirement scheme were not dealt with by the Hon'ble M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Departmental Representative, even the eligibility arena of the VRS in rule 2BA speaks only for 'voluntary retirement' or 'voluntary separation' for exemption under section 10(10C) and the word 'termination' does not find place in rule 2BA. It was, thus, submitted that since none of the situations prescribed in rule 21A(1) is applicable, the amount received under VRS is not eligible for relief under section 89(1) of the Act. Learned Departmental Representative thus strongly supported the stand of the Assessing Officer, and urged us to vacate the order of the CIT(A). 5. On the other hand, Shri Shrikrishan Kelkar, learned counsel for the assessee, made equally elaborate arguments in support of the conclusions arrived at by the CIT(A). It was pointed out that the assessee received certain ex gratia payment from Union Bank of India, in terms of the voluntary retirement scheme framed by the bank. It was further pointed out that the amount so received, except to the extent exempt under section 10(10C), is admittedly taxable under section 17(3) as profits in lieu of salary. Section 17(3) defines profits in lieu of salary to include 'the amount of any co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee placed his reliance on the judgment of Hon'ble Supreme Court in the case of CIT v. E.D. Sheppard [1963] 48 ITR 235 in support of the proposition that even the cases of voluntary separation arc covered by the scope and connotations of the expression "termination". Learned counsel for the assessee also placed his reliance on the judgments of Hon'ble Madras High Court in the cases of J. Vishalakhshi and CIT v. M. Raman [2000] 245 ITR 856 (Mad.) and of Hon'ble Delhi High Court in the case of CIT v. S.N. Chadha [2001] 249 ITR 31, in support of merits of availability of benefit under section 89(1) in the case of ex gratia received on voluntary compensation. It was submitted that these judgment s hold good even in the present context, and that there are no judicial precedents available to the contrary of the propositions laid down by these judgments. References were also made for, and reliance placed on, the judgments in the cases of Sundaram Motors (P.) Ltd. v. Ameerjan [1985] 152 ITR 64(SC) and Keshavji Ravji & Co. v. CIT [1990] 183 ITR 14 (SC). It was also submitted that it is well settled principle of interpretation that where more than one views ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received is taxed by the Revenue as a 'profit in lieu of salary' because in the impugned assessment order, the Assessing Officer himself has taxed it so. Under section 17(3)(i) 'profit in lieu of salary' includes, inter alia, the following receipts by an assessee:- (i) the amount of any compensation due to or received by an assessee from his employer or former employer at, or in connection, with termination of his employment or the modification of the terms and conditions relating thereto: The aforesaid provisions of section 17(3)(i) are in pari materia with the provisions of Expln. 2(i) to section 7 of the IT Act, 1922, which provided as follows: For the purpose of this section, 'profits in lieu of salary' includes: (i) 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; whether solely as compensation for loss of employment or for any other consideration. It is thus clear that barring the deletion of words "whether solely as compensation for loss of employment or for any other consideration" and insertion of words "or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of M. Raman, Hon'ble Madras High Court again followed this principle and referring to the same, added that "the said principle rendered by this Court in the case of resignation would equally apply to the case of voluntary retirement from service". That being so, there is no reason for us not to hold that the amount received by an employee, under voluntary retirement scheme, is nothing but a 'compensation on termination of service' for the purposes of the IT Act. In the hierarchical judicial system that we have, better wisdom of the Court below has to yield to higher wisdom of the Court above and, therefore, once an authority higher than this Tribunal has expressed an opinion on that issue, we have to respectfully follow the same. Such a High Court being a non-jurisdictional High Court does not alter the position as laid down by Hon'ble Bombay High Court in the matter of CIT v. Smt. Godavari Devi Saraf [1978] 113 ITR 589. Respectfully following these legal precedents, we hold that the amount received on VRS settlement is also, for the purposes of section 17(3) of the Act, constitutes compensation for 'termination of service'. There is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Section 10(10C) and section 89(1) are two different sections and the reference is specifically for section 10(10C). In any case, as rightly pointed out by the learned counsel section 89(1) does not grant an exemption. The distinction between an 'exemption' and a 'relief cannot be ignored or just washed away. Even if these restrictions be said to be desirable for proper working of the section and in harmony with the intent of the legislature, as is strenuously argued by the learned senior Departmental Representative, it is not open to us to supply the casus omissus. In the case of Tata Tea Ltd. v. Jt. CIT [2003] 87 ITD 351 (Cal.), to which one of us was a party, it was observed that "casus omissus, which broadly refers to the principle that a matter which has not been provided in the statute but should have been there, cannot be supplied by us, as, to do so will be clearly beyond the call and scope of our duty which is only to interpret the law as it exists." As Rowlatt, J. has said, in Cape Brady Syndicate v. IRC 1 KB 64, "In a taxing statute, one has to look merely at what is clearly said; there is no room for any intendment..." The temptation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
