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TMI Blog2024 (9) TMI 1718X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings, the assessee submitted that the amount received from Pfizer company are in the nature of ex-gratia payments voluntarily and hence did not fall under the definition of profits received in lieu of salary and therefore asked the Assessing Officer to permit him to withdraw the claim of deduction u/s 89 and treat the amount received from Pfizer as capital receipt and complete the assessment. 3. However, the Assessing Officer did not accept the above contention of the assessee and treated the amount of Rs. 20,41,068/- as profit in lieu of salary by observing as under: "10. From the above para it is clear that employer had offered the financial package to the employees in the event of employees opting to retire voluntary from their employment. The assessee had opted the said scheme and, therefore, had received the amount as compensation (termed as attractive financial package) in accordance with the scheme of VRS. But, counsel of the assessee said that this was not compensation of VRS amount and has requested to consider the amount received as advance salary. Thus, the department asked him to furnish is written reply by 21.09.2021 and video conferencing was over. In resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The para captioned Advance Salary for relief u/s 89 has been numbered as para no.2. In this para, the assessee has stated that the amount received by him on which addition has been made was "Wages for the remaining months of service with the company till the attainment of retirement age of 58 years. To justify this submission the assessee has relied on annexure II of the scheme. On perusal of annexure II, it is revealed that heading of annexure II, which is "Compensation and other dues payable to the Employee". Thus it is apparent from the heading itself that the amount received by the assessee was compensation on account of taking voluntary retirement scheme offered by the employer. Besides, in FULL AND FINAL SETTLEMENT COMPUTATION SHEET also, which has been submitted by the assessee himself during the course of assessment proceedings, there are compensation details and calculations thereof under the heading scheme compensation. 10.6 The remaining contents of this para no. 2 of assessee's reply cannot be considered as assessee wants to obtain relief u/s 89 which is not allowable under the provisions of the IT Act, 1961. Further, assessee has requested to consider his submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.11 Further, as per provision of section 17(3)(i) of the I.T. Act "The amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto". The above provision is squarely applicable in his case therefore, it cannot be treated capital receipts. 10.12 As regards various case laws relied upon by him, it is seen the facts of the cases which have been relied upon are quite different to the facts of the assessee, hence, cannot be considered for finalizing the assessment proceedings in this case, 11. Under these facts of assessee's case and in view of above discussions made in detail, the submission put forth by the assessee are found to be not justified. Therefore, proposed addition of Rs. 20,41,068/-is finalized and added back to the declared income of the assessee." 4. In appeal, the CIT (A) / NFAC upheld the action of the Assessing Officer. 5. Aggrieved with such order of CIT (A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: "1. The Learned CIT (A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial officer. 7. The Appellant Craves Leave to add, Alter, or amend any of the Grounds of the Appeal, before or during hearing of the Appeal. 6. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT (A) / NFAC and the paper book filed by both the sides. We have also considered the various decisions cited before us. We find subsequent to the hearing of this appeal, another appeal under identical facts and circumstances has been decided by us in the case of Ashok Raghunathrao Kulkarni vs. ITO vide ITA No. 117/PUN/2024, order dated 12.08.2024 wherein the amount received from Pfizer company as ex-gratia was held to be not taxable. The relevant observations of the Tribunal from para 23 onwards read as under: "23. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT (A) / NFAC and the paper book filed by both the sides. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case rejected the claim of relief u/s 89 of the Act of Rs. 18,74,899/- on income of Rs. 57,12,674/- treating the same a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome under the preview of sec. 17(3)(i) as amount of compensation. The said amounts have not been paid against any services of the assessee. Hence the same is not compensation as contemplated under the provisions of sec. 17(3)(i)." As the various courts have allowed the claim that the amount received at the time of cessation of his employment due to closure of the manufacturing unit as capital receipt during assessment proceedings in the cases referred by the assessee, the AO's has duly accepted the above claims of the respective assessee, which are very similar cases as that of the assessee's instant case. Hence, the reopened assessment proceedings in the case of the assessee, is hereby proposed to be completed by accepting the income returned by the assessee in response to 148." 25. In the remaining cases also, the respective AOs have treated such compensation as capital in nature. We, therefore, find merit in the arguments of the Ld. Counsel for the assessee that when the concerned AOs after reopening of the assessment have treated such compensation as capital in nature and the Revenue has not challenged the same and which has attained finality since no 263 proceedings hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the section dealing with the computation of income of the assessee ?" 8. is answered in the negative, in favour of the assessee and against the Department." 27. We find the Delhi Bench of the Tribunal in the case of ITO vs. Avirook Sen (supra) at para 12 of the order has observed as under: "12. As the payment of ex-gratia compensation was voluntary in nature without there being any obligation on the part of employer to pay further amount to assessee in terms of any service rule. it would not amount to compensation in terms of section 17(3)(i) of the Act. The impugned addition was rightly deleted by the Ld. CIT(A). The aforesaid point is accordingly determined against the revenue department. The appeal is accordingly not sustainable as we don't find any error of law or fact in the impugned order passed by Ld. CIT(A). The department appeal is liable to be dismissed." 28. The various other decisions relied on by the Ld. Counsel for the assessee placed in the paper book support his case to the proposition that the payment of ex-gratia compensation received by the assessee was voluntary in nature without there being any obligation on the part of the employer to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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