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5. The learned National Faceless CIT(A) erred in dismissing appeal because tax was not deductible or payable on closure compensation announced by the Central Govt in public interest for the employees of HMT Ltd. Tractor Division u/s10(10B) of the Income Tax Act, 1961. Rs. 21,18,827 for VRS Rs. 1,57,715 for excess Gratuity and Rs. 96012 for excess leave encashment is part of compensation announced by Central Govt in its Press Release dated 27th October2016. As per Article 265 of Constitution no tax shall be levied or collected except by authority of law. If the claim of assessee is not allowed then it is the case of unjust enrichment of Income Tax department, So, income of 23,72,554 may please be reduced and Tax of Rs. 4,15,805 be refunded along with due interest.

"5.2. Held: I have gone through the facts of the case and written submission filed by the appellant and assessment record. Brief facts of the case are that appellant is one of the employees of the HMTL-TD. This Tractor Division/Unit of HMTL was a loss-making Central Government Public Sector Undertaking for the last several years. Government of India in its Cabinet Meeting dated 27th October 2016 approved budgetary support to HMTL for payment of outstanding salary, introduction of VRS/VSS and closure of operations of Tractor Division. A press release was also issued on the same day. In compliance to this, an Office Order No. 15/16 dated 4th November 2016 regarding VRS/ VSS scheme was announced by HMTL Bangalore for all the permanent ITA No. 337-Chd-2024 Naresh Kumar kamboj, Zirakpur, employees who were on the rolls of Tractor Division as on that date. That scheme further envisages that employees not opting for VRS would be retrenched under the Industrial Disputes Act, 1947 as the Tractor Division is proposed to be closed down. Tax was deducted at source on compensation received at the time of VRS Appellant by way of revised return claimed that the said compensation is exempt under Second proviso and first explanation of Section 10(108) of Act. For this appellant placed reliance on the case of Hindustan Photo Film Workers Vs. The Government of India WP No.18566 of 2015 dated 17.03.2017. AO on the other hand held that facts of the above case are different than the present case and disallowed claim of the appellant made u/s 10(10B) of the Act on following findings that (1) sum received by the appellant on account of VRSNSS was not of the nature of compensation on termination of employment or compensation on closure of industry ie HMTL-TD. This amount is receipt on account of voluntary retirement, (ii) appellant was not retrenched in accordance with provisions of Industrial Dispute Act, 1947(1 D Act) or under any other Act or award in terms of section 10(108). The order under Industrial Dispute Act 1947 in the case HMT Ltd was passed on 14.2.2017 whereas the appellant accepted the VRS/VSS introduced on 4.11.2016. The appellant had not received payment pursuant to award under I.D. Act, 1947, hence the appellant is also not covered by the explanation (a) to section 10(10B), (ii) the case of the appellant does not fall under the second proviso to section 10(108) as the VRSVSS amount received by him was not of the nature of compensation as the Central Government's offer of VRSVSS announced on 27.10.2016 does not suggest that it was introduced having regard to the need for extending special protection to the employees of HMTL-TD, (iv) the case of the appellant is covered by provisions of section 10(10C) of the Act as he had opted the scheme voluntarily and he has not furnished any evidence opposing the scheme of VRS/VSS Further, the scheme also provided that employees not opting for VRS/VSS shall be retrenched. Since, the appellant has not been retrenched the amount received by him is of the nature of receipt on voluntary retirement or voluntary separation and accordingly, he is entitled to exemption of Rs.5,00,000/- out of the VRS/VSS receipts AO made addition of Rs.23,12,978/- in the total taxable income of the appellant.
[ 5.2.2. Let's understand the facts of VRS package of Hindustan Photo Film Workers (HPF) and HMTL-TD as per comparative chart given below.
ITA No. 337-Chd-2024 Naresh Kumar kamboj, Zirakpur, 5.2.3. The facts, intend and purpose of HMTL-TD are identical with the facts of HPF.Ld. AO has failed to appreciate finer details and observations of the Hon'ble Madras High Court when the Court observes that the package is not a VRS but a case of closure. It is true that the package is called "VRS" but the nomenclature of the package would be irrelevant, but what would be relevant is purpose for which the package has been sanctioned. There is no option available to the employees as the company has been closed down and therefore, the quantum which is sought to be given to the employees should be construed as compensation for closure. The package dated ITA No. 337-Chd-2024 Naresh Kumar kamboj, Zirakpur, 28.02.2014, sanctioned for employees of HPF, is special package exclusively dedicated and designed for the employees of HPF. The VRS Scheme for the employees of HMTL- TD is also exclusive and specific package for the Tractor Division, PinjoreThe earmarked money under budgetary support to HMTL for payment of outstanding salary / wages and other employee related dues and also for closure of HMT Tractor Division by offering attractive VRS/VSS at 2007 notional pay scales. Thus funds have been earmarked for a specific purpose. As per facts and circumstances described in detail in the Press release under the head "Background", the employees can hardly resist to take a stand against the said package This view is further strengthened, if we peruse that in financial year 2016- 17, 850 employees of HMTL-TD took VRS and 150 employees who did not offer for VRS were retrenched in January 2018. Hence, VRS scheme must be read in the nature of retrenchment compensation/ compensation on termination of employment on account of closure of HMTL-TD. The purpose behind this scheme in no uncertain terms is to rehabilitate the employees of HMTL-TD. The increase in the cost of living has made it very difficult for them to survive and meet their financial obligations and the Government thought it fit to offer this package to enable the employees to come out of the financial crises. This view eloquently emerges, if we carefully peruse the intent and purpose behind the scheme. It is to reiterate that in the said press release, it is categorically stated that the Tractor Division has been incurring losses continuously and is unable to pay the salaries and other statutory dues of its employees. The employees of Tractor Division based at Pinjore have not been paid salary since July, 2014 and other statutory dues are also pending since November, 2013. The statutory dues like Terminal benefits, PF, Gratuity. Leave encashment etc. are also pending for the employees of other Divisions of HMTL ie. Corporate Head Office (CHO), Common Service Division (CSD) and Food Processing Machinery Unit, Aurangabad (FPA). In view of the deteriorating position of the company and hardship being faced by the employees due to non-payment of salary / wages and other retirement dues, it has been decided to close down the Tractor Division of HMT Ltd by offering attractive VRS / VSS to its employees and clearing all their dues. In view of these facts and circumstances and by placing reliance on the case of HPF supra (SLP filed by the Union Government has also been dismissed by the Hon'ble Supreme Court], it is my considered opinion that the compensation received by the appellant at the time of VRS qualifies the parameters laid down under section 10 (10B) of Act. AO is directed to delete the addition. The Grounds of Appeal Nos.1 &2 are allowed."
4.5 Appellant's submissions were carefully considered. It is clear that the appellant received the compensation amount subsequent to the closure of his employer, HMT watches Ltd, Ranibagh. The closure of the company and subsequent compensation to employees was made according to the decision of the Cabinet Committee on Economic Affairs (CCEA) chaired by the Prime Ministerp Shri Narendra Modi, vide press notification dated 06/01/2016, by the Government of India.
4.6 Section 10(10B) of the Income Tax Act, 1961 exempts any compensation received by a workman under the Industrial Disputes Act, 1947 (14 of 1947), or under any other act or rules, orders or notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, at the time of retrenchment. The first proviso to section 10(10B) provides certain restrictions and limits the amount of exemption under this section. However the second proviso to section 10(10B) reads as under: