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TMI Blog2007 (9) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... BI and RBI was to pay ex gratia amount. The same was claimed as exempt by these employees under section 10( 10C ) of the Act. 3. The Assessing Officer was of the view that the payment received by the assessees under OERS do not qualify for exemption under section 10( 10C ) of the Act read with rule 2BA of the Income-tax Rules, 1962. The view of the Assessing Officer was based on the clarification issued by the RBI vide its letter No. 3079/Pension 5( iii )A/2004-05, dated 9-3-2005 and the extract from the same is reproduced herein below: - "Further we enclose a copy of the extract containing the salient features of the Optional Early Retirement Scheme (OERS). It may be observed therefrom that the income-tax shall be deducted at source on the entire amount payable as ex gratia. Besides, the ex gratia amount will be payable in one lump sum subject to the recovery of income-tax, which is to be borne entirely by the employee. It has also been observed from the clarifications received on the Scheme of Central Office that since the OERS will not comply with rule 2BA of the Income-tax Rules, 1962, and accordingly, the amount received by the employees under the OERS would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals decided this issue in favour of the assessee and against the revenue by making following relevant observations under paras 3 to 5 at pages 8 to 10: " 3. When the matter came up for hearing, the ld. counsel for the assessee, at the outset, has submitted that the issue involved in these appeals is covered by the decision of ITAT, SMC Bench, New Delhi in ITA No. 3552/Delhi/2006 in the case of ITO v. Shri Prem Kumar Gupta wherein it has been held thus: I have heard the rival submissions. I have also perused the record. I find that the learned CIT(A) has rightly held that the scheme framed by RBI was covered by the provisions of section 10( 10C ) and the amount received by the assessee at the time of voluntary retirement was also covered by section 10( 10C ) read with rule 2BA of the IT Rules, 1962. Therefore, he held that the assessee was also entitled to relief under section 89(1). The contention of the learned CIT(A) finds support from the following case laws: ( i ) CIT v. G.V. Venugopal [2005] 273 ITR 307 (Mad.); ( ii ) CIT v. P. Surendra Prabhu [2005] 279 ITR 402 (Kar.); ( iii ) CIT v. J. Ramamani [2006] 286 ITR 616 (Mad.); 5. After perusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a manifestly absurd and unjust result, which the Legislature could not have intended, the court is supposed to modify the language used by the Legislature, even to do some violence to it so as to achieve the obvious intention of the Legislature and produce a rational construction. An expression used in the statute is not always to be interpreted literally or grammatically. Some times it has to be interpreted having regard to the context in which the expression is used and having regard to the object and purpose for which the same is enacted. Section 10( 10C ) was inserted in order to make voluntary retirement attractive so as to reduce human complements for securing economic viability of certain companies. This object was elaborated by various departmental circulars and explanatory statements issued from time to time. Similarly, rule 2BA of the Income-tax Rules, 1962, which was inserted by the Income-tax (Sixteenth Amendment) Rules, 1992, was amended from time to time. All these go to show that this was intended to make voluntary retirement more attractive and beneficial to the employee opting for voluntary retirement. Therefore, this has to be interpreted in a manner beneficial t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter. The correctness of the advice rendered to them, however, appears to be doubtful. This Court, however, does not pass any opinion with regard thereto. This will answer whether the opinion expressed by the Chartered Accountant on the issue will make the sums in question taxable. Neither the opinion of the Chartered Accountant nor the views of the RBI will finally determine the fate of exemption that is claimed under section 10( 10C ) but the satisfaction of the conditions or guidelines laid down by the I.T. Rules, 1962. A plain reading of section and guidelines of rule 2BA shows that the scheme in question leaves no doubt in our minds that the sums in question are clearly exempt under section 10( 10C ) of the Act up to the extent of Rs. 5 lakhs. On the excess receipts the assessee is entitled to relief under section 89 of the Act. The provisions of section 89 of the Act read as under: - Where the assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance or is in receipt, if any one financial year, of salary for more than twelve months or a payment which under the provision of clause (3) of section 17 is a profit in lieu of salary, o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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