Ananda Kumar Bose v. The Commissioner Of Income Tax-Ii

IN THE HIGH COURT OF JUDICATURE AT PATNA CIVIL WRIT JURISDICTION CASE NO. 9471 of 2010 ========================================= Ananda Kumar Bose S/O late Durga Chandra Bose, r/o 300 –Premchand Path, P.O.- Rajendra Nagar, P.S. Kadamkuan, District Patna …………….. Petitioner Versus 1.The Commissioner Of Income Tax-II, having its office at 2[nd] Floor, Central Revenue Building, Birchand Patel Path, Patna Central Revenue Building, Birchand Patel Path, Patna 2.The Assistant Commissioner of Income Tax, Circle -5, having its office at 3[rd] Floor Lok Nayak Jai Prakash Bhawan, Dak Bunglow office at 3[rd] Floor Lok Nayak Jai Prakash Bhawan, Dak Bunglow Chouraha, Patna …………… Respondents Advocate =================================================== CORAM: HONOURABLE THE CHIEF JUSTICE And HONOURABLE MR. JUSTICE JYOTI SARAN ORAL JUDGMENT (13/01/2011) (Per: HONOURABLE THE CHIEF JUSTICE) This petition filed under Article 226 of the Constitution arises from the claim for refund of the amount of tax deducted at source made by assessee on the premise that the amount in question was exempt from Income tax under section 10(10C) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). The petitioner is a former employee of the Reserve Bank of India. On his retirement from service, he received certain retiral benefits including the amount of compensation of Rs.3,26,284/-. The –employer Reserve Bank of India, under the belief that the said amount was taxable, deducted at source a sum of Rs.1,61,707/-. In the income returned for the concerned assessment year 2004-05, the petitioner did not claim refund of the amount. In the year 2007, he made a representation to claim exemption and consequential refund of the amount of tax deducted at source. The claim made by the petitioner was latter fortified by Circular dated 2[nd]May 2009 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. Pursuant to the judgment of the Bombay High Court in the matter of Commissioner of Income Tax Vs. Koodathil Kaliyatan Ambujakshan [ (2009) 219 CTR (Bombay) 80], it was decided that “the employees of RBI (Reserve Bank of India) who received exgratia amount under OERS (Optional Early Recruitment Scheme) during the assessment year 2004-05 were entitled for the benefitof section 10 (10C) of the Income tax Act, 1961.” In spite of the aforesaid judgment of the Bombay High Court and the consequent Circular dated 2[nd] May 2009, the petitioner’s claim for refund of the amount deducted at source has not been processed by the respondents. Feeling aggrieved, the assessee has preferred the present petition. In answer to the notice issued by this Court, the learned –advocate Mr. Harshwardhan Prasad has appeared for the respondent Commissioner of Income Tax and has contested the writ petition. The only defence raised is, as the petitioner has not raised the claim for refund in the return filed by him, he is not entitled to the refund of the amount deducted at source. We are sorry to note that the defence raised by the department is not only contrary to the Circular dated 2[nd] May 2009, is also contrary to the spirit of the Circular No.14/1955 dated 11[th] Neyaz/ April 1955 and the several judgments delivered by the High Courts time and again. The learned advocate Mr. Pathy has relied upon two of such judgments in the matters of Commissioner of Income-Tax, –Madhya Pradesh II v. K.N. Oil Industries [ (1983) 142 ITR 13 –(M.P.)] and of Commissioner of Income-Tax, Gujarat I v. Ahmedabad Keiser-E-Hind Mills Co. Ltd. [ (1981) 128 ITR 486 Gujarat]. We are sorry to note that the defence raised by the department is not only contrary to the Circular dated 2[nd] May 2009, is also contrary to the spirit of the Circular No.14/1955 dated 11[th] Neyaz/ April 1955 and the several judgments delivered by the High Courts time and again. The learned advocate Mr. Pathy has relied upon two of such judgments in the matters of Commissioner of Income-Tax, –Madhya Pradesh II v. K.N. Oil Industries [ (1983) 142 ITR 13 –(M.P.)] and of Commissioner of Income-Tax, Gujarat I v. Ahmedabad Keiser-E-Hind Mills Co. Ltd. [ (1981) 128 ITR 486 Gujarat]. In above view of the matter, there is no controversy that the petitioner is entitled to the benefit of exemption under section 10 (10C) of the Act in respect of the amount of compensation received by him from his employer, the RBI. Consequently, he is entitled to proportionate refund of the amount deducted at source by his employer , the Reserve Bank of India. For the aforesaid reasons, the petition is allowed. The respondent no.2 the Assistant Commissioner of Income-Tax, Circle -5, is directed to consider the representation dated 21[st] November 2007 made by the petitioner and to re-assess the assessment made for the assessment year 2004-05 and to refund the amount of excess tax after giving exemption in respect of the sum of Rs.3,26,284/- under 10 (10C) of the Act. The aforesaid exercise shall be completed within six weeks from today. Rule is made absolute in the above terms. The parties will bear their own cost. Copy of the judgment be furnished to the learned advocates. ( R. M. Doshit,CJ.) (Jyoti Saran, J.)