10(10C)

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Querist : Anonymous (Querist)

01 December 2010 Sir I want 121 ITD 368 judjement. please provide me.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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01 December 2010 Title : Dy CIT vs Krishna Gopal Saha

Facts of the case:-

The assessee is a retired employee of State Bank. During the year under consideration, the assessee opted for voluntary retirement under a scheme named "Early Separation Plan" (ESP) floated by the bank. He received a compensation of Rs. 18,87,798. The employer, vide its letter, stated that employees availing the ESP Scheme are not eligible for exemption u/s 10(10C) of the Act as the scheme was not in conformity with Rule 2BA(i) to (v). Therefore, no deduction under section 10(10C) was allowed in the Form 16 issued by the employer. The assessee, however, claimed exemption under section 10(10C) in the return of income filed. The same was processed under section 143(1) of the Act. The assessment was reopened u/s 147 and the claim u/s 10(10C) was disallowed by the AO.

The CIT(A) allowed the assessee’s claim. On Revenue’s appeal, there was a difference of opinion between the members, and the matter was referred to the "Third Member".

Held that:-

The Third Member, in his order, relied on the case of SAIL DSP VR Employees Association v UOI (262 ITR 638) (Cal) which squarely applied to the assessee. Their Lordship in the said judgment observed that section 10(10C) 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. All these go to show that this was intended to make voluntary retirement more attractive and beneficial to the employees opting for voluntary retirement. Therefore, this has to be interpreted in a manner beneficial to the optee for voluntary retirement, if there is any ambiguity. A similar view was taken by the Hon’ble Bombay High Court in the case of CIT Vs. Nagesh Devidas Kulkarni (291 ITR 407) and the Karnataka High Court in the case of CIT Vs. P. Surendra Prabhu (279 ITR 402).

Following the above decisions, the amount received by the assessee was allowed.

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