In Chandra Ranganathan And Ors v. Commissioner Of Income-Tax, [2010] 326 Itr 49

ITA 2/2010BEFOREHON’BLE THE CHIEF JUSTICE MR MADAN B. LOKURHON’BLE MR JUSTICE U. B. SAHA The following two substantial questions of law were framed for consideration of this court on 16-6-2010 :- (1)Whether on the facts and in the circumstances of the case, the tribunal was justified and correct in law in holding that the assessee is entitled to exemption U/S 10(IOC) of the Income Tax Act, 1961 in respect of the amount received as compensation on retirement under the Optional Early Retirement Scheme (OERS)of the Reserve Bank of India upto an amount of Rs.5,00,000/- even if the said scheme is not in conformity with the provisions of the said section vis-�-vis Rule 2BA of the Income Tax Rules, 1962 ? (2)Whether on the facts and in the circumstances of the case, the tribunal was justified and correct in law in holding that the sum received as compensation on termination/cessation of employment under the VRS scheme is a part of salary and thereby eligible for relief U/s 89 of the Act ? Learned counsel for the parties are agreed that in view of the Circular dated 9-5-09 issued by the Central Board of Direct Taxes and which has been referred to in Chandra Ranganathan and Ors vs. Commissioner of Income-Tax, [2010] 326 ITR 49(SC) both the issues are required to be answered in the affirmative and in favour of the assessee and against the Revenue. We may note that the order of the Income Tax Appellate Tribunal, out of which these substantial questions of law had arisen, relied upon an earlier order passedby the Income Tax Appellate Tribunal, Bombay Bench. It appears that the order passed by the Bombay Bench of the Tribunal was considered by the Bombay High Court in Commissioner of Income Tax vs. Koodathil Kallyatan Ambujakshan [2009] 309 ITR 113 (Bom) and the Hon’ble Supreme Court referred to this decision while deciding in favour of the assessee by relying upon the Circular issued by the Central Board of Direct Taxes. The appeals are disposed of in view of the above. The records be sent back to the Tribunal.