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TMI Blog2022 (2) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... anation that was furnished by the Appellant in respect of the adjustments made to the total income Ground No. 2: Additions to total income could not be made on issue which are debatable 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition made by the Ld. CIT(A) on issues which are debatable and thus, could not have been subject matter of adjustment under section 143(1) of the Income-tax Act, 1961 ("the Act") 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not considering the judicial precedents in a proper perspective which supports the case of the Appellant. Ground No. 3: Voluntary severance pay/ex-ratia received by the Appellant on account of termination of employment constitutes a capital receipt and thus, not taxable as income 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that voluntary ex-gratia received by the Appellant is taxable under section 17(3)(i) of the Act. 6. On the facts and circumstances of the case and in law, the voluntary exigatia payment received by the Appellant cannot be considered as compensation for the purpose of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The assessee has filed a letter on the merits of the case along with the judicial decisions but there was no action from the DCIT.CPC. Finally the intimation was passed u/s 143(1) of the Act on 27-03-2019. 4. Aggrieved by the order of the DCIT CPC, the assessee has filed an appeal with CIT(A). Since there was a delay in filing the appeal, the CIT(A) has condoned the delay considering the facts that the assessee was pursuing the rectification proceedings as alternative remedy. Whereas, in respect of addition of severance pay, the contentions raised by the assessee are that it is a capital receipt. But the CIT(A) is of the opinion that it forms part of the income u/s 17(3)(i) of the Act and confirmed the addition and granted relief in the other grounds of appeal with respect to adjustment of TDS credit and partly allowed the assessee appeal. Aggrieved by the CIT(A) order, the assessee has filed an appeal before the Honble Tribunal. 5. At the time of hearing, the Ld. AR of the assessee submitted that the CIT(A) has not considered the vital facts on merits of the case and the judicial decisions. The Ld.AR emphasized that the CPC does not have power to make the adjustments in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any shut down and the payment takes the character of a capital receipt. 9. We on perusal of the facts, the letter and the Ld.AR submissions find that the assessee was in employment for more than a decade with the company and due to business operations shutting down in India the company has taken a call to pay the severance payment along with the full and final settlement. The fact is very clear that it is the voluntary payment made by the company for loss of employment which cannot be disputed. The Ld.AR supported the submissions with the fallowing judicial decisions as under;- "1. CIT Vs. Ajit Kumar Bose, [1987] 165 ITR 90 2. CIT Vs. Sharda Sinha [2016] 237 Taxman 111 (Delhi) 3. Oberio Hotel (P) Ltd. Vs. CIT [1999] 236 ITR 903 (SC) 4. Khanna & Annadhanam Vs. CIT [2003] 351 ITR 110 (Delhi) 5. Arunbhai R Naik Vs. ITO [2015] 379 ITR 511 (Guj) 6, Chandrakant Tolia Vs. ACIT [2009] 316 ITR 312 (Madras) 7. Bajaj Auto Finance Ltd. Vs. CIT [2018] 404 ITR 564 (Bombay) 8. Kvaverner John Brown Engg. Vs. ACIT [2008] 305 ITR 103 (SC) 9. Khatua Junkar Ltd Vs. KS Pathania [1992] 196 ITR 55 (Bombay)" 10. Further the severance payment to the assessee is voluntary in nature and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the amount was paid as compensation for the termination or in lieu of the termination of the employment. 5. The letter issued by the employer dated July 3, 1969, stated that the amount was being paid ex gratia. There is nothing to indicate that the assessee was entitled to continue in the employment of the company up to any particular age. Under the conditions of service, his services were liable to be terminated on giving three months' notice without assigning any reason. Under the circumstances, it cannot be said that the assessee was entitled to remain in service for any period longer after the requisite notice has been given or that the employer was under any obligation to pay anything to the assessee in connection with the termination of his employment other than the salary for the period of notice. Under the circumstances, in its true nature and character, the payment was ex gratia, that is to say, totally voluntary; it was not compensation which implies some sort of an obligation to pay. 6. In this view, it cannot be said that the amount in question was profits in lieu of salary within the meaning of Clause (3) of Section 17. It was not taxable as such. The findin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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