A.l.sethuraman v. The Assistant Commissioner Of Income Tax Salary Circle Iii Chennai 34

In the High Court of Judicature at Madras Dated :8.12.2009 Coram : The Honourable Mr.Justice K.RAVIRAJA PANDIANandThe Honourable Mr.Justice M.M.SUNDRESH Tax Case (Appeal) No.1311 of 2009 A.L.Sethuraman ... Appellant Vs The Assistant Commissioner ofIncome TaxSalary Circle IIIChennai 34. .. Respondent TAX CASE (APPEAL) under Section 260A of the Income Tax Act against the order of the Income TaxAppellate Tribunal, Madras 'A' Bench dated 27.06.2008 made in I.T.A.No.2275/Mds/2007 for theassessment year 2004-2005.For Appellant : Mr.R.VenkatnarayananFor Respondent: Mr.J.Nareshkukmar JUDGMENT JUDGMENT OF THE COURT WAS DELIVERED BY K.RAVIRAJA PANDIAN,J The appeal is filed by the assessee against the order of the Income Tax Appellate Tribunal, Madras'A' Bench, dated 27.06.2008 made in ITA No.2275/Mds/2007. The relevant assessment year is2004-2005. 2. The facts as culled out from the statement of facts stated in the memorandum of appeal are asfollows:- The assessee was employed in the ICICI Bank, Chennai. He took voluntary retirement under the"Early Retirement Option" (ERO) floated by the ICICI Bank and ERO cash compensation ofRs.19,12,580/- was received by him. In the return filed for the assessment year 2004-05 declaring atotal income of Rs.14,12,580/- the assessee claimed exemption under Section 10(10C) of the IncomeTax Act 1961 to the extent of Rs.5,00,000/- out of the compensation received under the above saidscheme. Initially, the return was processed under Section 143(1) and a refund of Rs.2,46,429/- wasgranted. Later on, the case was taken up for scrutiny by issue of notice under Section 143(2) of theIncome Tax Act 1961. The assessing officer denied the exemption of Rs.5,00,000/- claimed underSection 10(10C) taking the view that the scheme of ERO of the ICICI Bank had not fulfilled theconditions (ii), (iii) and (iv) of Rule 2BA of the Income Tax Rules. Aggrieved by the said order, theassessee preferred an appeal before the Commissioner of Income Tax (Appeals), who allowed theappeal. Against that order, the Revenue preferred an appeal before the Income-tax Appellate Tribunal and the Income-tax Appellate Tribunal relying on the decision of this court in T.C.Nos.1458to 1461of 2007 allowed the appeal ex parte without giving sufficient opportunity to the assessee.Aggrieved by the said order, the present appeal is filed by the assesseee by formulating thefollowing substantial questions of law:- 1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in entertaining the Departmental appeal which is contrary to the Instruction No.2/2005 dt. 24.10.2005issued by CBDT wherein the Department is precluded from filing an appeal, if the tax effect involvedin the appeal is less than Rs.2 lakhs ? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal wasright in law in holding that the appellant was not entitled to exemption under Section 10(10C) of theIncome Tax Act 1961 in respect of the amount received under the Early Retirement Option of theICICI Bank ? 3. We heard the arguments of the learned counsel for the appellant and perused the materialsavailable on record. 4. In the case of Commissioner of Income Tax and Others Vs. M.Chelladurai and Others (317 ITR370), this court after considering the scheme has held that the employees are not entitled to thebenefit under Section 10(10C) as the scheme is not in conformity with the Rule 2BA of the IncomeTax Rules. However, in the case of Commissioner of Income Tax Vs. M.Arokiam and Another (317ITR 381), the Division Bench of this court to which one of us (K.Raviraja Pandian,J.) was a party,while observing that as per the scheme the assessee is not entitled to the benefit under Section10(10C) of the Income Tax Act, has held as follows:- 3. We heard the arguments of the learned counsel for the appellant and perused the materialsavailable on record. 4. In the case of Commissioner of Income Tax and Others Vs. M.Chelladurai and Others (317 ITR370), this court after considering the scheme has held that the employees are not entitled to thebenefit under Section 10(10C) as the scheme is not in conformity with the Rule 2BA of the IncomeTax Rules. However, in the case of Commissioner of Income Tax Vs. M.Arokiam and Another (317ITR 381), the Division Bench of this court to which one of us (K.Raviraja Pandian,J.) was a party,while observing that as per the scheme the assessee is not entitled to the benefit under Section10(10C) of the Income Tax Act, has held as follows:- "However, on a perusal of the assessment order in the present case, the tax effect in T.C.No.1099 of2008 is Rs.1,49,913 and in T.C.No.1102 of 2008 is Rs.1,83,480, which is below the tax effect fixed inInstruction 1979 Circular F.No.279/126/98 ITJ dated March 27, 2000, wherein it has been statedthat an appeal to the High Court could be filed by the Revenue only if the tax effect is more thanRs.2 lakhs. Similar issue has been considered by this court with reference to Circular F.No.279/126/98 ITJ dated March 27,2000 in T.C.No.222 of 2004 dated August 16, 2007 (CIT Vs.Associated Electrical Agencies (2007) 295 ITR 496) and rejected the appeal filed by the Revenue onthe premise that not only the tax effect involved was below the sum fixed in the circular but also theother qualifications prescribed therein were also not available to carve out and bring the caseoutside the purview of the circular. In the present appeals also, not only the tax effect is less thanthe amount stated in the circular and the other exceptions prescribed were also not available.Hence, following the decision of this court dated August 16,2007, made in CIT Vs. AssociatedElectrical Agencies (2007) 295 ITR 496, T.C.No.222 of 2004, these appeals are dismissed. " 5. In the present appeal also, the tax effect is less than the amount stated in the circular and thisaspect of the lower tax effect has not been taken into consideration by the Tribunal. Further, it couldbe seen that the order of the Tribunal is an ex-parte order. Hence, following the decision of thiscourt in the case of Commissioner of Income Tax Vs. M.Arokiam and Another (317 ITR 381), theorder of the Tribunal is set aside and the appeal is allowed. (K.R.P.,J.) (M.M.S.,J.)8.12.2009 Index : YesInternet : Yeskrr/ To1.The Assistant Registrar Income-tax Appellate TribunalRajaji Bhavan, Besant Nagar,Che18 of 1998ai-90. (Five copies with records) 2. The Secretary,Central Board of Direct Taxes,New Delhi. (Three copies) K.RAVIRAJA PANDIAN, J.andM.M.SUNDRESH,J. Krr/ T.C. (A) No.1311 of2009