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TMI Blog2007 (11) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Madras High Court in the case of G. N. Badami v. CIT [1999] 240 ITR 263 and P. Arunachalam v. CIT [2000] 241 ITR 827 and the decision given by the Jaipur Bench of the Tribunal wherein it was held that the amount received under the Voluntary Retirement Scheme (VRS) constitutes compensation for "termination of service" for the purposes of section 17(3) and that the conditions laid down under section 89(1) are satisfied and the assessee is entitled to relief on the amount received under the voluntary retirement scheme as reduced by exemption under section 10(10C) of the Act. 4. In the case of CIT v. J. Visalakshi [1994] 206 ITR 531, the question under consideration before the Madras High Court was Whether the ex gratia compensation of Rs. 63,230 received by the assessee consequent on his resignation from the employment is entitled to the relief under section 89(1) of the Income-tax Act. The Madras High Court considered sections 89(1) and 17(3) of the Income-tax Act and held thus (page 533): "The question as to whether the assessee is entitled to the relief under section 89(1) would depend upon the interpretation to be placed on the words 'termination of his employment', occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f voluntary retirement of an employee from service. Accordingly, the Appellate Tribunal was right in holding that the amount received by the employee at the lime of voluntary retirement of service would be regarded as salary, and the relief under section 89 of the Income-tax Act, 1961, would be admissible in respect of the amount received by the assessee from his employer at the time of voluntary retirement." 6. The Delhi High Court in the case of CIT v. S. N. Chadha [2001] 249 ITR 31, held that in terms of section 17(3)(ii) any payment other than those specified in the provision itself is included in the expression "salary". After noticing section 89(1) of the Income-tax Act, the Delhi High Court held thus (page 33): "Even a bare reading of the provision makes it clear that it has application to any payment which is made under the provisions of clause (3) of section 17 as a 'profit in lieu of salary'. That being the position, the Tribunal was correct in its view that section 89(1) was applicable to the assessee's case. Our answer for both the questions is in the affirmative, in favour of the assessee and against the Revenue." 7. Mr. R. B. Mathur, counsel for the Revenue submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) and filed an appeal before the Income-tax Appellate Tribunal (for short, 'the Tribunal'). The Tribunal heard the appeal with other connected matters and found no illegality in the order of the Commissioner (Appeals). It is this order, which is the subject-matter of challenge in this appeal. 4. The counsel for the Revenue invited our attention to rule 21A(e) and sub-rule (6) of the Income-tax Rules and contended that the payment received by the assessee on voluntary retirement being covered by clause (e) and there being specific order by the Board in exercise of the power conferred under sub-rule (6) declining relief under section 89, the assessee was not entitled to the relief under section 89 of the Income-tax Act. He would submit that the judgment of the Madras High Court delivered in the case of CIT v. M. Roman [2000] 245 ITR 856, cannot be applied in the present situation as the statutory provision of section 10(10C) of the Income-tax Act was not in existence at the time when the said judgment was delivered. 5. That the amount received by the assessee on voluntary retirement is covered by section 17(3)(i) of the Income-tax Act cannot be doubted. 'Profits in lieu of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10(10C). Section 89 of the Income-tax Act operates in a different field and the relief given to an assessee under section 89 is for different purpose and cannot be mixed up with the exemption given under section 10(10C). Clause (viii) of section 10(10C) which provides that no exemption there under shall be allowed in relation to any other assessment year has nothing to do with the relief under section 89, which is distinct and independent. 8. Our attention was also invited to section 35DDA of the Income-tax Act. We are afraid, that the said section even remotely has no application to the assessee, who is not an employer. This section deals with amortisation of expenditure incurred under the voluntary retirement scheme by the employer. It has nothing to do with the amount received by an employee (assessee) from his employer in connection with voluntary retirement under the voluntary retirement scheme. 9. The Madras High Court in the case of M. Raman [2000] 245 ITR 856 (Mad) observed as under (page 856): 'The as has taken voluntary retirement from the service and received an amount of compensation at the time of his voluntary retirement. The question that arises is whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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