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TMI Blog2012 (8) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is with regard to the action of the lower authorities in holding that the assessee was not entitled to exemption of Rs 5,00,000/- under section 10(10C) of the Act. The assessee had received ex gratia payment on voluntary retirement under the Exit Option 2 Scheme (EOS) floated by the State Bank of India in respect which exemption under section 10(10C) was claimed by the assessee. The authorities below have denied the claim of exemption on the ground that the scheme in question does not conform to the guidelines of Rule 2BA of Income-tax Rules, 1962 (in short "the Rules"). The authorities below have also referred to CBDT Instruction dated 6.10.2009 to support that the EOS floated by the State Bank of India was not eligible for exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complied in the present case. Secondly, it is also brought out that Guideline No. (iv) prescribing that the vacancy caused by the voluntary retirement is not to be filled up, is not also complied with by the instant voluntary scheme. The position taken by the Revenue is that in the instant case the voluntary retirement scheme was aimed at improving the level of morale of the employees in the bank and was not for the purpose of reduction in the existing strength of the employees. Coupled with that, it has also been pointed out that the SBI reserves the right to fill up vacancies caused by the voluntary retirement taken by the employees under such scheme. Per contra, the learned Counsel, appearing for the assessee, has vehemently submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the substantive provisions of the Act. Applying the tests we find firstly that it satisfies the first test namely 10 years of service and 40 years of age. In the instant case it is 25 years of service and 40 years of age. Secondly it applies to all employees. This meets the second requirement. The third requirement is that the scheme has been drawn to result in overall reduction in the existing strength of the employees. This has not been expressly stated in the scheme. However, we have noted the object behind the section 10(10C) and the note put up before the Governor at the time when the scheme was framed. The material on record would indicate that the employees had been rendered surplus on account of various steps taken by the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requirements of the section as well as the guidelines framed for the purpose of section 10(10C) namely rule 2BA." 5. Qua the objection sought to be raised by the Revenue with regard to guideline No. (iii) prescribed under Rule 2BA which reads as under: "(iii) the scheme of voluntary retirement (or voluntary separation) has been drawn to result in overall reduction in the existing strength of the employees;" we find that even in the voluntary retirement scheme considered by the Hon'ble High Court the scheme did not expressly state so. The Hon'ble High Court took note of the material on record which indicated that employees had been rendered surplus on account of various steps taken by the employer and, therefore, impliedly the scheme wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, whereas in the precedent case it related to employees of Reserve Bank of India. 7. In this view of the matter, in our considered opinion, the Income-tax authorities ought to have considered the attendant factual scenario and thereafter examine as to whether Guideline No. (iii) and (iv) prescribed under Rule 2BA of the Rules have been complied with or not, as per the parity of reasoning laid down by the Hon'ble jurisdictional High court in the case of Koodathil Kallyatan Ambujakshan (supra). In this context, we note that in a bunch of appeals in the case of Shri Pawane Dada Biru & others (supra), the Tribunal restored the matter back to the file of the Assessing Officer for the purposes of examining as to whether the voluntary schem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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