Income Tax Appellate Tribunal - Mumbai
Smita Ashok Chansikar, Thane vs Assessee on 26 August, 2011
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IN THE INCOME TAX APPELLATE TRIBUNAL " E " BENCH, MUMBAI
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER
AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
ITA NO.8717/Mum/2011
Assessment year:- 2007-08
Smita Ashok Chansikar Vs. Income Tax Officer,
Asmita Bungalow, Savarkar Ward 4(4)
Marg, Near Daya Smruti
Marg, Virar (E), Thane
PAN:- AAVPC5178M
Appellant Respondent
Appellant by Shri Mandar Vaidya
Respondent by Smt. Parminder
lquokbZ dh rkjh[k@Date of hearing 17-12-2013
?kks"k.kk dh rkjh[k@Date of pronouncement 17-12-2013
ORDER
Per I.P. Bansal, JM
This appeal is filed by the assessee. It is directed against the order passed by CIT(A) dated 26th August 2011 for assessment year 2007-08. Grounds of appeal reads as under:-
1. The Ld. Commissioner of Income Tax (A) erred in not accepting existing binding judgment of Mumbai Income-tax Appellate Tribunal 'F' Bench in the case of Vilas Sudam Sawant SBI EOS employee ITA No. 6016/M/07 dated 6.10.2008.
2. The Ld. Commissioner of Income Tax (A) erred in not accepting judgment of Pune Income-tax Appellate Tribunal in the case of Maruti S. Gheji SBI EOS -2- employee ITA No. 578/PN/2010 dated 28.9.2010 and in the case of Haribhau Sali SBI EOS employee ITA No. 1429/PN/2009/07-08 dated 25.3.2011. The claim u/s 10(10C) should be allowed on this ground alone.
3. The Ld. Commissioner of Income Tax (A) erred in not accepting judgment of Ahamadabad Income-tax Appellate Tribunal in the case of Pandya Vinod SBI EOS employee ITA No. 1492/AHD/2010 dated 30.7.2010 and in the case of Bikramjit Passi SBI EOS employee ITA No. 925/CHD/2011 dated 9.11.2011. The claim u/s 10(10C) should be allowed on this ground alone.
4. The Ld. Commissioner of Income Tax (A) erred in not considering the Supreme Court Judgment in the case of the Hon'ble Supreme Court decision in SLP (Civil) No. 7717 of 1990 wherein it is clearly laid down that the orders of the higher appellate authorities are to be followed unreservedly by the lower authorities. The claim u/s 10(10C) should be allowed on this ground alone.
5. The Ld. Commissioner of Income Tax (A) erred in ignoring the Bombay High Court decision in case of RBI OERS employees reported 309 ITR 113 which clearly held that the public sector banks VRS schemes are complying Rule 2BA r.w.
sec. 10(10C). The claim u/s 10(10C) should be allowed on this ground alone.
6. The Ld. Commissioner of Income Tax (A) erred in not considering the order issued by CIT II Thane on the directions of the Bombay High Court in the case of Writ petition No. 1051 of 2010 that allowed Sec. 10(10C) exemptions to the SBI Exit Option employees. The Ld. Commissioner of Income Tax (A) order is bad on facts since Hon'ble CIT II Thane issued a clarification in the above case confirming allowability of the claim u/s 10(10C). The claim u/s 10(10C) should be allowed on this ground alone.
7. The Ld. Commissioner of Income Tax (A) erred in not considering the fact that on merit also each and every clause of Rule 2BA is complied in the case of SBI -3- Exit Option Scheme. The claim u/s 10(10C) should be allowed on this ground alone.
8. The Appellant craves leave to add, amend, alter or withdraw any of the contentions before or during the hearing.
2. The assessee in this case is an individual and is an ex employee of State Bank of India. During the year under consideration he opted for Exit Option Scheme of SBI. Originally the assessee filed its return at an income of Rs. 7,83,520/-. Subsequently by way of revised return, exemption of Rs. 5,00,000/- was claimed under the provisions of section 10(10C). According to the AO the VRS floated by the Bank was not as per the prescribed guidelines laid down in Rule 2BA of the Income Tax Rules. Therefore, the AO did not allow exemption of Rs. 5,00,000/-.
3. Aggrieved assessee filed an appeal before CIT(A) who has also upheld the action of the AO. Aggrieved by the decision of CIT(A), the assessee has filed the aforementioned grounds of appeal before the Tribunal.
4. During the course of appellate proceedings it was submitted that the issue raised by the assessee is now covered in favour of the assessee by the order of Tribunal in other similar cases. Reference was made to the decision of Mumbai bench of Tribunal dated 11/9/2013 in the following cases:-
i). ITA No. 8719/Mum/2011 in the case of Mrs. Nirmala S. Shetty Vs. ITO 1(2) Thane
ii) ITA No. 8720/Mum/2011 in the case of Mrs. Mrudul S Parulkar Vs. ITO 1(2) Thane
iii) ITA No. 8764/Mum2011 in the case of Manmohan D Kelkar Vs. ITO 1(2) Thane
iv) ITA No. 8765/Mum/2011 in the case of Shri Prabhakar T Chavan Vs. ACIT Cir 4, Thane
v) ITA No. 8766/Mum/2011 in the case of Mrs. Manasi W Kulakarni Vs. ITO 1(2) Thane -4-
vi) ITA No. 8825/Mum/2011 in the case of Mrs. Natal Augustine D'mello Vs. ITO 1(2) Thane (Copy of the aforementioned order was placed on record and was also given to the Ld. DR.)
5. The issue in the aforementioned appeals was decided in favour of the assessee with the following observations:-
3. We have heard the parties and carefully perused the facts of the case. We find that the issue involved in these appeals is squarely covered in favour of the assessee's and against the revenue by the following decisions Bikram Jit Passi in ITA No.925/Chd/2011 for A.Y. 2008-09 vide order dated 09.11.2011 Pandya Vinodchandra Bhogilal 133 TU 2513, order dated 30.07.2O10 Vilas Sudam Sawant in ITA No.6016/M/2007 for AY 2006-
07, order dated 06.10.2008 Maruti Somappa Gheji in ITA No. 578/PN/2010 for AY 2007-08, order dated 28.09.2010 Shri Rohitkumar Kantilal in hA 969/Ahd/2010 for AY 2008- 09, order dated 05.05.2011 3 Asapu Babu Rao in ITA No.516/Vizag/2010 for AY 2007- 08, order dated 05.01.2011 Keerti SaWa Veerabhadra Rao in ITA No.491/Vizag/2010 for AY 2007-08, order dated 24.01.2011 Uma Subramanian in 1TA No. 3120/Mumf2OlZ for AY 2008-09, order dated 10.08.2012 The decisions referred hereinabove are fully applicable to the facts of the -5- present case. For the sake of convenience, we would like to reproduce the relevant operative part of the decision rendered by the Ahmedabad Bench of the Tribunal in the case of Pandya Vinodchandra Bhogilal vs. ITO (2010 45 DTR 105, wherein it has been held as under:
"2. Thus the only issue involved in this appeal is about allowabillty of exemption under s.10(IOC) of the ITAct, 1961.
3. The facts of the case are that assessee is a Deputy Manager in SBI and has taken VRS on 31st May 2006 under exit opt/on scheme introduced by the Bank of India w.e.f 7 May, 2005. The assessee received salary and pension amounting to Rs. 3,81,894 (including ex gratia) On examination of Form No.16 the AO noticed that assessee received ex gratia of Rs.3,07,236 on VRS. He claimed exemption under S.10(10C) of the Act. The Assessing Officer disallowed the claim by following Circular No. Chief CTR, th Baroda letter BRD/Chief CIT/Tech/MICS/10(1OC)/2009-10 dt 17 June, 2006. The assessee relied on the decision of the Tribunal, Kolkata in the case of Dy CIT vs. Krishna Gopal Saha (2009) 29 DTR (Kol) (TM) (Trib) 385 but the learned AO did not agree and made me addition. The learned CIT(A) also confirmed the disallowance by trying to distinguish the decision of Third Member in Dy. CIT vs. Krishna Gopal Saha 's case (supra).
4. We have heard the parties and perused the material on record. In our considered view the distinction cited by the learned CIT(A) is not sound and does not stand to reason. The only basis for not allowing the claim has been that scheme for VRS is not in accordance with r.28A. However, it has not been pointed out how the employer has not framed the scheme in accordance with r.2BA. Earlier till 2002 schemes were required to be approved by the Chief CIT but thereafter such requirement has been dispensed with and, therefore, it is only for the employer to frame the scheme for VRS or for earlier exit option. If AO had any doubt about the scheme he could have enquired from the employer. So far as the assessee employee is concerned, he cannot be penalized and tax will be levied on him on the assumption that the scheme framed by employer is not in accordance with r. 2BA. In any case, the -6- judgment of Third Member in Dy. CIT vs. Krishna Gopal saha (supra) is dearly applicable and we do not find any reason to take a different view For the sake of convenience we refer to following para from the Third Member judgment in Krishna Gopal Saha's case (supra) as under:
"5. At the time of hearing before me, none appeared on behalf of the assessee-respondent. I have therefore, heard the learned Departmental Representative and perused the material placed before me. I find that the issue has been considered by the Hon 'Ole Jurisdictional High Court in the case of SAIL DSP VP Employees Association 1998 vs, Union of India (supra) in which their Lordships held as under "Sec. 10(1OC) of the IT Act, 1961, uses the expression 'any amount received by an employee.., at the time of his .voluntary retirement in accordance with any scheme or schemes of voluntary retirement'. if a plain literal interpretation of statutory provision produced a manifestly absurd and unjust result, which the legislature could not have intended, the Court is supposed to modify the language used by the legislature even to do some violence to it so as to achieve the obvious intention of the legislature and produce a rational construction An~'.' "expression used in the statute is not always to be interpreted literally or grammatically. Sometimes it has to be interpreted having regard to the context in which the expression is used and having regard to the object and purpose for which the same is enacted. Sec. 10(1OC) was inserted in order to make voluntary retirement attractive so as to reduce human complements for securing economic viability of certain companies. This object was elaborated by various Departmental circulars and explanatory statements issued from time to time. Similarly, r.25A of the IT Rules, 1962, which was inserted by IT (Sixteenth Amendment) Rules, 1962, was amended from time to time. All these go to show that this was intended to make voluntary retirement more attractive and beneficial to the employee opting for voluntary retirement Therefore, this has to be interpreted in a manner beneficial for the optee for voluntary retirement, if there is any ambiguity -7- Sums paid on voluntary retirement to the extent of rupees five lakhs are exempted from being charged to tax by reason of S.10(10C). Even if the payment is stretched over a period of years, the same would not become chargeable to tax in any subsequent assessment year.' From the above it is evident that their Lordships of the jurisdictional High Court held that an employee, who takes voluntary retirement, is entitled to deduct/on under s. 10(10C) even if the payment is stretched Over a period of years. They have also held that provision of s. 10(10C) should be interpreted in a manner beneficial to the optee for voluntary It may be pointed out that in the above-mentioned case, the employer i.e. SAIL was of the opinion that the employees were not entitled to exemption under S.10(10C) and accordingly, SAIL had been deducting tax at source on the amount paid under their voluntary retirement scheme. The facts are similar in the assessee's case, because in the case of the assessee also, the employer believing that the assessee is not entitled to deduction under S. 10(10C) has deducted tax at source on the amount paid on voluntary retirement The facts being identical, the above decision of Hon Vie jurisdictional High Court would be squarely applicable to the case under appeal before the Tribunal.
6. Similarly, Hon'ble Bombay High Court in the case of CIT vs. Nagesh Devidas Kulkami (supra) held as under 'The assessee is entitled to the exemption under s.10(1OC) of the Act and also rebate under S. 89 of the Act in respect of the amount received in excess of Rs.5,00,000 on account of voluntary retirement' Thus their Lordships have held that the assessee, who opts for voluntary retirement, is not only entitled to exemption under s. 10(10C) but also rebate under S.89 of the IT Act. Similar view is taken by the Hon'ble Karnataka High Court in the case of CIT vs. P.Surendra Prabhu ('supra,I wherein their Lordships held as under:-
'That the assessee, employee of the respondent bank was not only entitled to the benefit of exemption under £ 10(1CC) of the Ad- to the extent prescribed in the pro vision itself but for any -8- amount over arid above the prescribed limit; under the aforesaid provision, the assessee was also entitled to relief under S. 89(1) of the Act r/w s.21A.
7. From the above it is evident that while the learned AN! relied upon the decision of Hon'ble Madras High Court in the case of CIT vs. M.Chelladurai & Ors (2008) 5 DTR (Mad) 201, he has not taken into account the decisions of other High Court under identical facts held the assessee, L e., the retired employee, to be entitled to deduction under s. 10(10C). Similar view is taken by Hon'ble Bombay as well as Karnataka High Courts. The decision of Hon'ble Jurisdictional High Court is binding upon us and moreover if tow views are possible, while interpreting the provisions, a view which is favourable to the assessee has to be adopted. Hon'ble jurisdictional High Court in the above referred case of SAIL DSP VP Employees Association 1998 vs. Union of India (supra) has also held that the pro visions of s.10(10C) are to be interpreted liberally in a manner which is beneficial to retired employees in view of the above. I respectfully following the decisions of Hon'ble jurisdictional High Court, Bombay High Court and Karnataka High Court agree with the learned JM and hold that the assessee is entitled to exemption under s. 10(10C) to the extent of Rs.5 lakhs."
The facts of the present cases and the issue involved are similar to the facts and issue involved in the above cases. The assessees/appellants are also ex-employees of the State Bank of India. Respectfully following the decisions rendered above, we hold that the amount of Rs.5 lacs received by each assessee is eligible for exemption u/s. 1O(1OC) of the Act.
5. In the result, all the appeals are allowed.
Order pronounced in the open court on 11th September, 2013.
6. The learned DR on the other hand relied upon the order of AO and CIT(A).
7. We have heard both the parties and their contentions have carefully been considered. The issue raised by the assessee is covered in favour of the assessee -9- by the aforementioned order of the Tribunal. Following the aforementioned order in which one of us (Accountant Member) is a party, we decide the issue in favour of the assessee and the AO is directed to delete the addition of Rs. 5,00,000/-.
8. In the result appeal filed by the assessee is allowed.
Order Pronounced in the open court on 17 -12-2013.
Sd/- Sd/-
(N.K. Billaiya) (I.P. Bansal)
Accountant Member Judicial Member
SKS Sr. P.S, Mumbai dated 17-12-2013
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, "E" Bench, ITAT, Mumbai
//True Copy//
BY ORDER
ASSISTANT REGISTRAR
ITAT, Mumbai Benches, Mumbai