Tax Case (Appeal) v. The Assistant Commissioner Of Income Tax Circle I Tambaram Chennai 45

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 8.12.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal)No.1541 of 2008 Smt.Saranayaki Kannan ... Appellant Vs. The Assistant Commissioner ofIncome TaxCircle ITambaramChennai 45. ...Respondent Tax Case Appeal filed under section 260A of the Income Tax Act,1961 against the order of the Income Tax Appellate Tribunal, Madras'C' Bench, dated 13.6.2008 passed in ITA No.2403/Mds/2007 for theassessment year 2004-2005. Preferred against the order of theCommissioner of Income Tax(Appeals) IX, Chennai-34, dated 3.9.2007 inT.T.A. 485/06-07 and against the order of the Assistant Commissionerof Income-Tax Circle-I, Tambaram, Chennai 45 for the assessment year2004-05 PAN/GIR No.AAFPK 9009C For Appellant :Mr.C.V.RajanFor Respondent:Mr.J.Nareshkumar JUDGMENT (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN,J.) The appeal is filed by the assessee against the order of theIncome Tax Appellate Tribunal, Madras 'C' Bench, Chennai, dated https://hcservices.ecourts.gov.in/hcservices/ 13.6.2008 passed in ITA No.2403/Mds/2007 relating to the assessmentyear 2004-2005. The appeal is admitted on the following questionsof law: 1. Whether the Income Tax Tribunal isright in law in entertaining the appealfiled by the department, when the tax effectin the present case was only Rs.1,36,650/-having regard to the relevant instructionsof the CBDT, prescribing monitory limitsfor filing of appeals by the department ? 2. Whether on the facts and in thecircumstances of the case, the Income TaxTribunal was right in law in holding thatthe appellant was not entitled toexemption under Section 10(10C) of theIncome Tax Act 1961 in respect of theamount received under the OERS of theReserve Bank of India ? 2. The facts as culled out from the statement of facts statedin the memorandum of appeal are as follows:- The assessee was employed in the Reserve Bank of India. He tookvoluntary retirement under the Optional Early Retirement Scheme(OERS) framed by the Reserve Bank of India. In the return filed forthe assessment year 2004-05 declaring a total income ofRs.9,86,423/- the assessee claimed exemption under Section 10(10C)of the Income Tax Act 1961 to the extent of Rs.5,00,000/- out of thecompensation received under the said scheme. Initially, thereturn was processed under Section 143(1) on 4.5.2005. Later on, thecase was taken up for scrutiny by issue of notice under Section 143(2) of the Income Tax Act 1961. The assessing officer denied theexemption of Rs.5,00,000/- claimed under Section 10(10C) taking theview that the scheme of OERS of the Reserve Bank of India had notfulfilled the conditions (ii), (iii) and (iv) of Rule 2BA. Aggrievedby the said order, the assessee preferred an appeal before theCommissioner of Income Tax (Appeals), who following the decision ofthe of the Mumbai Bench of the Income Tax Appellate Tribunal in ITANo.6384/Mds/2006 in the case of Vaishali A.Shelar, allowed theappeal and directed the assessing officer to grant exemption underSection 10(10C) as claimed by the assessee. Against that order,the Revenue preferred an appeal before the Income-tax AppellateTribunal and the Income-tax Appellate Tribunal relying on thedecision of this court in T.C.Nos.1458 to 1461 of 2007 allowed the appeal. Aggrieved by the said order, the present appeal is filedby the assessee on the questions of law referred to above. 3. The learned counsel for the assessee as well as theRevenue submitted that the issue is now squarely covered by thejudgment of the Supreme Court made in Civil Appeal Nos.6997 to 7002of 2009 (Chandra Ranganathan and Others Vs. Commissioner of IncomeTax, Chennai) dated 21.10.2009. It has also taken note of theCircular issued by the C.B.D.T. In the said judgment the SupremeCourt has observed as follows:- appeal. Aggrieved by the said order, the present appeal is filedby the assessee on the questions of law referred to above. 3. The learned counsel for the assessee as well as theRevenue submitted that the issue is now squarely covered by thejudgment of the Supreme Court made in Civil Appeal Nos.6997 to 7002of 2009 (Chandra Ranganathan and Others Vs. Commissioner of IncomeTax, Chennai) dated 21.10.2009. It has also taken note of theCircular issued by the C.B.D.T. In the said judgment the SupremeCourt has observed as follows:- "During the course of hearing of theseappeals, it was brought to our notice that bythe subsequent letter dated 8[th] May 2009, issuedby the Central Board of Direct Taxes, it wasindicated that the matter had been reviewed onthe basis of the judgment of the Bombay HighCourt dated 4[th] July 2008 in the cae ofCommissioner of Income Tax Vs. KoodathilKallyatan (2008)219 CTR (Bom)80 2008 12 DTR 138and it was held that amounts received by retiringemployees of the RBI would be eligible forexemption under the aforesaid provisions of theIncome Tax Act. On behalf of the Union of Indiaand the Commissioner of Income Tax, therespondent herein, it was submitted that inview of the said circular, the respondent wouldallow the benefit of deduction to the appellantsunder Section 10(10C) of the Income Tax Act1961 as far as the retired employees of theReserve Bank of India are concerned." 4. The circular of the C.B.D.T reads as follows:- "It has now been brought to the notice ofthe Board that the Hon'ble High Court of Bombayvide its order dated 4[th] July 2008 in the case ofCommissioner of Income Tax Vs. KoodathilKallyatan Ambujakshan (2008 219 CTR (Bom) 80 hasheld that Optional Early Retirement Scheme of RBIsatisfies all the conditions of Rule 2BA andamountsreceivedbyretiringemployeesthereunder were eligible for exemption underSection 10(10C). That judgment has become final. 3. The matter has therefore been reviewed inthe Board in view of the aforesaid order of theHon 'ble High Court of Bombay and it has beendecided that the employees of RBI who acceptedOERS would be entitled for the benefit ofSection 10(10C) of Income Tax Act, 1961." 5. In view of the above, the order of the Tribunal is setaside and the appeal is allowed answering the questions of law infavour of the assessee. The assessee is entitled to the benefitof deduction under Section 10(10C) of the Income Tax Act. krr/ Sd/- Asst.Registrar/True Copy/ Sub.Asst.RegistrarTo1.The Assistant Registrar Income-tax Appellate Tribunal Rajaji Bhavan, Besant Nagar, Che18 of 1998ai-90. (Five copies with records)2. The Secretary,Central Board of Direct Taxes,New Delhi. (Three copies)3.The Assistant Commissioner of Income Tax Circle-I Tambaram, Chennai45.4.The Commissioner of Income Tax (Appeals)IX121, M.G. Road, Chennai-34. 5.The Income Tax Appellate Tribunal Bench"C"Chennai. T.C. (A) No.1541 of 2008 TM(CO)EU 18.01.2010