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TMI Blog2014 (7) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... r rule 2BA except as to some departures from the guidelines, but not in violation of the guidelines as a whole or of the provisions of section 10(10C), its object and purposes, then, in such an event, merely because the scheme differs at one or two points from the guidelines is not sufficient to deny the benefits granted under the section 10(10C) to an employee in view of the beneficial nature of the provision keeping in view the purpose and object sought to be achieved through such a provision. We, therefore, are of the view that denial of exemption to the assessee only because he has received compensation on his retirement a little more than the limit prescribed by rule 2BA, will be against the spirit of the provisions of the section 10(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT(A) should be quashed. 3. The Commissioner of Income-tax(Appeals) erred in holding that clause vi of the rule 2BA is violated by the employer by paying excess amounts than allowed ignoring the assesses calculations. The order of the CIT(A) should be quashed. 4. The Commissioner of Income-tax (Appeals) erred in holding that the interpretation brought out of the clause vi by the assessee is incorrect. In the cases where revenue is involved the interpretation favourable to the assessee should be accepted and the order of the CIT(A) should be quashed. 5. The Commissioner of Income-tax (Appeals) failed to appreciate the fact that the VRS scheme drafted by the employer has ambiguity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensation of ₹ 20,59,007/-. Initially this compensation was offered to tax but the assessee filed revised return claiming exemption of ₹ 5 lakhs u/s 10(10C). During assessment proceedings the Assessing Officer noticed that the compensation payable under the scheme of the employer did not satisfy conditions of Rule 2BA of the Income Tax Rules and the payment was more than the stipulated limits as per clause-(vi) of the Rule 2BA. The assessee was asked to explain but the explanation offered did not find favour with the Assessing Officer. The Assessing Officer called for the information from the employer of the assessee, who categorically stated that the scheme did not fulfil the conditions of Rule 2BA including clause (vi) of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compensation payable/paid exceeded both the limits set out in clause (vi) of Rule 2BA. The calculation given by the assessee was also erroneous. He therefore held that the action of the Assessing Officer in disallowing deduction u/s 10(10C) to the extent of ₹ 5 lakhs was correct and accordingly dismissed the appeal of the assessee. The assessee is thus in appeal before us. 5. We have heard the ld. Representatives of the parties and have also gone through the records. The ld. AR of the assessee has contended that the company had clearly framed the VRS as tax compliant and the workmen had accepted that the VRS framed was exempted u/s 10(10C) of the Income Tax Act. Only on this understanding the workers had retired from the company v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 577) while relying upon the decisions of the High courts of Bombay in the case of CIT vs Nagesh Devidass Kulkarni (2007) 210 CTR(Bom.) 471, Hon ble Kolkata High Court in the case of SAIL DSP VR Employees association vs. Union of India (2003) 181 CTR (Cal) 367 and of Hon ble karnatka High Court in the case of CIT vs. P. Surendra Prabhu(2005) 198 CTR (kar)209 has held that the provisions of section 10(10C) being beneficial provisions are to be interpreted liberally. The assessee is entitled to exemption U/S 10(10C) to the extent of ₹ 5 lakhs, even if the amount received exceeds the limits as prescribed by Rule 2 BA of the income tax rules. Further, the Hon ble Jurisdictional High Court of Bombay, in the case of CIT vs. Koodathil Kallya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10C), except that the assessee in this case had received amount on his voluntary retirement more than the limit prescribed under rule 2BA. As per section 10(10C), the scheme is to be framed as per the guidelines as may be prescribed. Further a perusal of the heading of rule 2BA shows that it prescribes the guidelines for the purpose of section 10(10c). The guidelines, as its nomenclature suggests, are just for the purpose of guidance, while framing the scheme of voluntary retirement by the institutes/companies and cannot be said to be mandatory in nature but only procedural or guiding in nature. If the scheme as a whole, otherwise in accordance with the provisions of section 10(10C) and as per the guidelines under rule 2BA except as to some ..... X X X X Extracts X X X X X X X X Extracts X X X X
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