Mr.s.parthasarathy v. The Assistant Commissioner Of Income Tax Salary Circle Iii, Chennai-34

In the High Court of Judicature at Madras Dated : 23.12.2009 Coram : The Honourable Mr.Justice K.RAVIRAJA PANDIAN and The Honourable Mr.Justice M.M.SUNDRESH TAX CASE (APPEAL) Nos.1210, 1217, 1249 and 1250 OF 2009 Mr.S.Parthasarathy...Appellant inTC(A)No.1210/2009Mrs.S.Ananthi...Appellant inTC(A)No.1217/2009Mr.R.Ratnavelu...Appellant inTC(A)No.1249/2009Mrs.C.Tamilarasi...Appellant inTC(A)No.1250/2009VsThe Assistant Commissioner of Income TaxSalary Circle III, Chennai-34...Respondent inall the appeals APPEALS under Section 260A of the Income Tax Act against the orders of the Income Tax AppellateTribunal Chennai 'A' Bench respectively dated 12.8.2008, 13.6.2008, 13.8.2008 and 18.6.2008 madein ITA Nos.2283/Mds/2007, 2394/Mds/2007, 2469/Mds/2007 and 2398/Mds/2007.For Appellants : Mr.R.Venkata NarayananFor Respondent : Mr.J.Nareshkumar, Sr.Standing Counsel for IT J U D G M E N T (JUDGMENT WAS DELIVERED BY K.RAVIRAJA PANDIAN,J)These appeals were filed against the orders of the Income Tax Appellate Tribunal by formulating thefollowing substantial questions of law :"i. Whether, on the facts and in the circumstances of the case, the Tribunal was justified inentertaining the Departmental appeal, which is contrary to Instruction No.2/2005 dated 24.10.2005issued by the Central Board of Direct Taxes wherein the Department is precluded from filing anappeal if the tax effect involved in the appeal is less than Rs.2 lakhs andii. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the appellant was not entitled to exemption under Section 10(10C) ofthe Income Tax Act, 1961 in respect of the amount received under the Early Retirement Option ofthe ICICI Bank ?" 2. In all these appeals, as the facts are one and the same and the questions of law are identical as tothe applicability of the circular of the Central Board of Direct Taxes dated 24.10.2005, the factsrelating to TC(A)No.1210 of 2009 arising out of ITA.No.2283/Mds/2007 in respect of the assessmentyear 2004-2005 are stated hereunder : The assessee is an individual and was employed in ICICI Bank. He took voluntary retirement underthe Early Retirement Option (hereinafter referred to as the ERO) floated by the ICICI Bank. The EROcash compensation of Rs.16,96,780/- was received by the assessee. For the assessment year2004-2005, the assessee filed his return of income on 16.6.2004 declaring a total income ofRs.2,27,710/- and claimed a refund of Rs.2,60,470/-. The assessee claimed exemption under Section10(10C) of the Act to the extent of Rs.5 lakhs out of the compensation received under the saidscheme. Subsequently, the assessee filed a revised return on 22.12.2004 admitting an income ofRs.11,96,780/-, which was processed under Section 143(1) of the Act and a refund of Rs.1,90,755/-was granted. Later on, the case was taken up for scrutiny by issuance of a notice under Section143(2) of the Act and in the assessment under Section 143(3) of the Act, the Assessing Officer tookthe view that the ERO scheme of the ICICI Bank did not fulfill the conditions enumerated inSub.Clauses (iii) and (iv) of Rule 2BA of the Income Tax Rules (hereinafter referred to as the Rules)and that the exemption under Section 10(10C) of the Act cannot at all be allowed. The scrutinyassessment was completed on 26.12.2006 denying exemption of Rs.5 lakhs under Section 10(10C) ofthe Act and the total income was determined at Rs.16,96,780/-. 3. Not satisfied with that, the assessee filed an appeal before Commissioner of Income Tax (Appeals)challenging the denial of exemption under Section 10(10C) of the Act. The Commissioner of IncomeTax (Appeals) allowed the appeal filed by the assessee. Aggrieved by the order of the Commissionerof Income Tax (Appeals), the Revenue filed an appeal before the Tribunal, which allowed the appealfollowing the decision of this Court in TC.Nos.1458 to 1461 of 2007 dated 12.3.2008 wherein thescheme formulated by the ICICI Bank has been considered and it was held that the said scheme isnot in consonance with Sub.Clauses (iii) and (iv) of Rule 2BA of the Rules and as such, exemptioncannot be granted. The correctness of the same is now put in issue before us not on the ground ofmerits but on the ground that the tax effect in these cases is less than Rs.2 lakhs, which has beenprescribed as a monetary limit by the circular of the Central Board of Direct Taxes in InstructionNo.2/2005 dated 24.10.2005 wherein it has been specifically stated that if the tax effect is less thanRs.2 lakhs, the Department need not have to file an appeal to the Tribunal and that this circular hasnot been taken into consideration by the Tribunal. 4. We have heard the learned counsel on either side and perused the materials on record. 5. It is of-course true that this Court, in TC.Nos.1458 to 1461 of 2007 dated 12.3.2008, to which oneof us (K.Raviraja Pandian,J) is a party, considered the said scheme framed by the ICICI Bank andfound that the said scheme is not coming under the purview of Sub.Clauses (iii) and (iv) of Rule 2BAof the Rules and that the claim of the person, who retired voluntarily under the said scheme fordeduction under Section 10(10C) of the Act, is not available having regard to the terms of thescheme. Notwithstanding coming to the conclusion as above on merits in several cases where the taxeffect is less than the one prescribed under Instruction No.2/2005 of the Central Board of DirectTaxes dated 24.10.2005, without going into the merits of the case, this Court allowed the appeals onthe sole ground that the tax effect is less than the one prescribed in the circular of the Central Boardof Direct Taxes for filing an appeal. 6. In these cases also, the tax effect is less than Rs.2 lakhs prescribed in the circular of the Central Board of Direct Taxes for filing an appeal before the Tribunal. On that ground, after hearing thelearned counsel for the Revenue, by answering the questions of law in the negative against theRevenue and in favour of the assessee, the appeals are disposed of. No costs. (K.R.P.J.) (M.M.S.J.)23.12.2009K.RAVIRAJA PANDIAN,JANDM.M.SUNDRESH,J RS Index : YesInternet : Yes To 1. The Assistant Commissioner of Income Tax, Salary Circle III, Chennai-342. The Income Tax Appellate Tribunal Chennai 'A' Bench RS TC(A)NOS.1210, 1217, 1249& 1250 OF 2009