9911796707
TMI Blog2006 (3) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... he instant appeal filed under section 260A of the Income-tax Act, 1961 ("the Act" for short) is directed against order dated September 10, 2004 rendered by the Income-tax Appellate Tribunal, Ahmedabad Bench "SMC A" in I.T.A. No. 2179/AHD/2004 with CO. No. 161/AHD/2004, by which the Tribunal has held that under rule 2BA (vi) of the Income-tax Rules, 1962 ("the Rules" for short), only the lower of the two limits specified therein is exempt and, therefore, only a sum of Rs. 35,445 being the lower limit, would be allowable to the assessee under section 10(10C) of the Act. The appellant was an employee of M/s. Reliance Industries Limited. He took voluntary retirement under a voluntary retirement scheme. On such retirement, he received a sum of Rs. 2,21,535, which was claimed as exempt under section 10(10C) of the Act. The Assessing Officer held that the amount receivable by the assessee on his voluntary retirement was worked out on the basis of a scheme which was not in consonance with the requirements specified in rule 2BA(vi) of the Rules and was, therefore, not allowable. Feeling aggrieved, the appellant preferred an appeal before the Commissioner of Income-tax (Appeals), who delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Division Bench and after hearing learned counsel for the appellant, the appeal was ordered to be admitted vide order dated January 31, 2006, on the following substantial question of law: "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in invoking rule 2BA(vi) of the Income-tax Rules, 1962, in the case of the assessee who is in receipt of the sum from the employer on voluntary retirement?" This court has heard Mr. K.R. Dixit, learned counsel for the appellant, and Mr. Manish R. Bhatt, learned counsel for the respondent, at length and in great detail. Before answering the substantial question of law on which the instant appeal is admitted, it would be relevant to notice certain provisions of the Act and the Rules, which are as under: "10.(10C) any amount received or receivable by an employee of- (i) a public sector company; or (ii) any other company; or (iii) an authority established under a Central, State or Provincial Act; or (iv) a local authority; or (v) a co-operative society; or (vi) a University established or incorporated by or under a Central, State or Provincial Act and an institution declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia) an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette, specify in this behalf ; or (viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf, at the time of his voluntary retirement or voluntary separation shall be exempt under clause (10C) of section 10 only if the scheme of voluntary retirement framed by the aforesaid company or authority or co-operative society or University or institute, as the case may be or if the scheme of voluntary separation framed by a public sector company, is in accordance with the following requirements, namely:- (i) it applies to an employee who has completed 10 years of service or completed 40 years of age; (ii) it applies to all employees (by whatever name called) including workers and executives of a company or of an authority or of a cooperative society, as the case may be, excepting directors of a company or of a co-operative society; (iii) the scheme of voluntary retirement or voluntary separation has been drawn to result in overall reduction in the existing strength of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of voluntary scheme which should not exceed the limits prescribed therein. It is not the intention of the Legislature that every voluntary retirement scheme framed by the companies must provide that an employee availing of benefit of voluntary retirement scheme would be paid an amount either equivalent to (1) three months' salary for each completed year of service, or (2) salary at the time of retirement multiplied by the balance months of service left before the date of his retirement on superannuation. On construction of rule 2BA of the Rules, it is difficult to hold that other manners/methods/modes of payment of amount in the voluntary retirement scheme framed by the companies are forbidden. If a construction is adopted that every voluntary scheme framed by a company must provide for payment of the amount equivalent to (1) three months' salary for each completed year of service, or (2) salary at the time of retirement, multiplied by the balance months of service left before the date of retirement of an employee on his superannuation, several employees of several companies would be adversely affected without any fault on their part and the scheme of voluntary retirement would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount receivable on account of voluntary retirement or voluntary separation of the employee should not exceed the amount equivalent to three months salary for each completed year of service or salary at the time of retirement multiplied by the balance months of service left before the date of his retirement on superannuation. The question posed for consideration of this court is whether the amount representing the lower of the two limits specified in item (vi) of rules 2BA (the limit being the amount equivalent to three months' salary for each completed year of service or salary at the time of retirement multiplied by the balance months of service left before the date of his retirement on superannuation) is allowable under the scheme of voluntary retirement. Rule 2BA does not provide at all that the amount representing the lower of the two limits specified in clause (vi) of rule 2BA should be allowed under the scheme of voluntary retirement. If the interpretation on clause (vi) of rule 2BA of the Rules, as suggested by the Tribunal is accepted, it would amount to rewriting clause (vi) of rule 2BA by importing the words "whichever is lower" therein, which is not pe rmissible t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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