9911796707
TMI Blog2024 (9) TMI 1719X X X X Extracts X X X X X X X X Extracts X X X X ..... y of making additional submissions, which were essential & necessary. The Appellant was debarred from making personal representation through Video Conferencing as specifically requested for & the principles of fair representation have not been allowed & the learned CIT (A) passed the Order hurriedly for no reason. 2. The Learned CIT (A) has confirmed by partially holding that amount of Rs. 50,72,750/- by treating it as Profits in lieu of Salary, he has erred in understanding the meaning of Compensation in reference to Sec. 17(3)(i) as explained by various High Courts & has failed to apply the established legal position of appellant's entitlement to receive & employer's Obligation to pay, are fundamental to hold the said amounts as compensation. He has erred in treating the said Capital Receipt amounts as Profits in lieu of Salary u/s 17(3), ignoring Explanation 3 of Sec. 17(2) & Rule 3 sub-clause (10) Explanation ()(). 3. The Learned CIT (A) has erred by not taking a balanced view by differing on the nature of the payments received from the employer, he erred in not accepting the amounts of Rs. 59,72,750/- as Capital Receipts in the same spirit as he has acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stands against and in support of the impugned disallowance. It further transpires that this tribunal's recent coordinate bench's order in ITA. No. 117/PUN./2024 Ashok Raghunathrao Kulkarni vs. ITO, Aurangabad has already decided the very issue in assessee's favour and against the department as follows : "3. Facts of the case in brief, are that the assessee is an individual and filed his return of income on 02.08.2019 declaring total income of Rs. 61,10,370/-. The case was selected for compulsory scrutiny under the E-assessment Scheme, 2019 on the following issues: S.No. Issues i. Refund Claim ii. Relief for Arrear Salary or Advance Salary 4. Accordingly, statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') were issued and served on the assessee, in response to which the assessee submitted details as called for by the Assessing Officer from time to time. 5. During the course of assessment proceedings the Assessing Officer noted from the ITR that the assessee has shown salary income of Rs. 63,56,239/- in the ITR. Out of this, an amount of Rs. 57,12,674/- was shown as salary received in advance in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be informed in writing or by electronic mail about the acceptance of their Applications and the concerned Employee will be deemed to have voluntarily retired on February 8, 2019, unless mutually agreed otherwise. * If the Application has been accepted by the Management, the Employee will be paid compensation equivalent to the lesser of the following, subject to a minimum of 6(six) months' Wages drawn by the Employee..... ............................ * In addition to the Compensation as provided under Clause 5 above, each Employee whose signed Application has been accepted by the Company will also be entitled to incentives based on certain conditions ................................" 7. The assessee also gave the breakup of the amount of Rs. 57,12,674, details of which are as under : Ex-gratia (Severance pay) [Subject to a minimum of 6 (six months Wages drawn by the Employee: (i) 75 days wages for every year of service with the Company, Or Wages for the remaining months of service with the Company till the attainment of retirement age of 58 years.] Rs. 41,76,438/- (ii) Other Payments (Early Bird = Rs. 7 Lakh and Group participation Incent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the employee to decide whether or not to opt for the same. Moreover, the payment of exgratia (severance pay) under the scheme together with all other dues mentioned therein is in full and final settlement of all the statutory and contractual dues owned to the assessee in connection with his employment with the company and the cessation thereof. It is also mentioned in the preamble of Financial scheme for employees at Auragabad 2019 (scheme) issued from the employer Pfizer Healthcare India P Ltd. that those employees who opt for voluntary retirement under the Scheme will not be entitled to any compensation or notice pay under the provisions of the Industrial Disputes Act, 1947 as their cessation from the employment constitutes resignation and does not constitute retrenchment or termination of employment by the company. 4.3.3 In the appellant's case, the company has issued Form 16 to the appellant showing the compensation including other due payables under salary as per provisions contained u/s. 17(1) and tax deducted at source accordingly, which shows that the nature of pay an allowance received by the appellant from his employer on relieving the job, is in difference natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is for each such employee to decide whether or not to opt for the same. (iv) In the event the employees opt to retire voluntarily from their employment with the Company in accordance with the Scheme, their last day of employment with the Company will be February 8, 2019, (unless mutually agreed otherwise in writing) and they will be paid an attractive financial package on the terms and conditions set out below. Those employees who do not opt for the Scheme (as hereinafter defined), will be paid only statutory or contractual dues payable on cessation of employment, provided they are eligible for the same." 13. Referring to other terms and conditions as per clause (11), the Ld. Counsel for the assessee drew the attention of the Bench to the sub-clause (viii) of the same, which reads as under: "(viii) All Employees who opt for voluntary retirement under the Scheme will not be entitled to any compensation or notice pay under the provisions of the Industrial Dispute Act, 1947 as their cessation from the employment constitutes "resignation" and does not constitute "retrenchment" or "termination of employment" by the Company". 14. Referring to the provisions of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: "14. Notice Period : During the period of probation, your employment can be terminated without any notice or assigning any reason thereof on either side. On confirmation your employment can be terminated by one month's notice in writing or pay in lieu thereof on either side." 16. He accordingly submitted that the decision of the Hon'ble High Court of Calcutta cited (supra) is squarely applicable to the assessee. 17. The Ld. Counsel for the assessee referring to the decision of the Pune Bench of the Tribunal in the case of Mahadev Vasant Dhangekar vs. ACIT (2023) 149 taxmann.com 170 (Pune-Trib.) submitted that the Tribunal in the said decision has held that where the assessee had received Rs. 47.21 lacs from the erstwhile company as ex-gratia and letter has been issued by the employer which clearly stated that payment of amount has been made voluntarily to the assessee and was not compensation without establishing letter as non-genuine or without examining sanctity of payment made simply invoking provisions of section 17(3)(iii) for making addition was not justified. 18. Referring to the decision of the Delhi Bench of the Tribunal in the case of ITO vs. Avir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alternate claim of the assessee that such amount being a capital receipt cannot be brought to tax. It is the submission of the Ld. Counsel for the assessee that in case of various other employees who have received similar compensation, the same has been accepted as capital receipt by the respective AOs in reassessment proceedings and no addition has been made. Further, various Co-ordinate Benches of the Tribunal in similarly placed employees have also treated such compensation received on termination of service as capital in nature and not falling u/s 17(3) of the Act. 24. We find the Assessing Officer in the case of Sharad D. Magar, who also resigned voluntarily from service of Pfizer Healthcare India Pvt. Ltd., Aurangabad has accepted the compensation received at Rs. 30,49,176/- as capital in nature by observing as under: "Brief facts of the case: The assessee, Shri Sharad Daulatrao Magar, having PAN: ASHPM1986C, an salaried individual, had filed ITR-1 u/s. 139(1) for AY 2019-20 on 29.07.2019 declaring total income of Rs. 32,03,150/-. Further Rs. 35,54,140/- was shown as Gross Salary. The assessee was employee of M/s Pfizer Healthcare India Pvt Ltd, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Assessing Officer. 26. We further find the Hon'ble Calcutta High Court in the case of CIT vs. Ajit Kumar Bose (supra) has observed as under: "4. The amount in question was received by the assessee from his employer. It was received by him in connection with the termination of his service. But the question still remains whether it was compensation. Since it was received by the assessee in connection with the termination of his employment, the term "compensation" would be referable to that event. In other words, it is to be seen whether 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 give ..... X X X X Extracts X X X X X X X X Extracts X X X X
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