Tc/101/2007 Of Commissioner Of Income Tax v. M.chelladurai

IN THE HIGH COURT OF JUDICATURE AT MADRAS Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN Tax Case (Appeal) Nos.101, 419, 22, 425 and 1360 of 2007and 1353 and 1397 of 2007Commissioner of Income Tax,Madurai.Appellant in TC (A) No.101/2007Commissioner of Income Tax,ChennaiAppellant in TC (A) Nos.419, 4251353, 1397 & 1360 of 2007Commissioner of Income Tax,Tamilnadu II, MadrasAppellant in TC (A) No.22/2007 Tax Case (Appeal) No.101 of 2007 Appeal under section 260A of the Income Tax Act against theorder dated 25.08.2006 in ITA No.346/Mds/2006 on the file of theIncome Tax Appellate Tribunal, Madras 'C' Bench for thehttps://hcservices.ecourts.gov.in/hcservices/assessment year 2004-05. Tax Case (Appeal) No.419 of 2007Appeal under section 260A of the Income Tax Act against theorder dated 25.08.2006 in ITA No.2955/Mds/2005 on the file of theIncome Tax Appellate Tribunal, Madras 'D' Bench for theassessment year 2000-01. Tax Case (Appeal) No.22 of 2007Appeal under section 260A of the Income Tax Act against theorder dated 03.08.2007 in ITA No.1257/Mds/2007 on the file of theIncome Tax Appellate Tribunal, Madras 'B' Bench for theassessment year 2004-05. Tax Case (Appeal) No.425 of 2007Appeal under section 260A of the Income Tax Act against theorder dated 25.08.2006 in ITA No.630/Mds/2006 on the file of theIncome Tax Appellate Tribunal, Madras 'A' Bench for theassessment year 2004-05. Tax Case (Appeal) No.1360 of 2007Appeal under section 260A of the Income Tax Act against theorder dated 22.05.2007 in ITA No.2136/Mds/2006 on the file of theIncome Tax Appellate Tribunal, Madras 'B' Bench for theassessment year 2004-05. Tax Case (Appeal) No.1353 of 2007Appeal under section 260A of the Income Tax Act against theorder dated 14.05.2007 in ITA No.986/Mds/2007 on the file of theIncome Tax Appellate Tribunal, Madras 'A' Bench for theassessment year 2004-05. Tax Case (Appeal) No.1397 of 2007Appeal under section 260A of the Income Tax Act against theorder dated 08.06.2007 in ITA No.994/Mds/2007 on the file of theIncome Tax Appellate Tribunal, Madras 'C' Bench for theassessment year 2004-05. 1.against the order of the Commissionerof Income Tax (Appeals) I, Madurai dated 18.11.2005 inITA.No.87/05-06 2. against the order of Commissioner of Income(A) IX, 121, Mahtma Gandhi Road, Chennai dated 21.6.2005 inITA.51/2005-2006 3. against the order of the Commissioner ofIncome Tax (Appeals) IV, Chennai dated 19.2.2007 in Appeal No,CIT (A) IV, / CHE/447/06/07 4. against the order of theCommissioner of Income Tax (A) IX, Chennai dated 30.12.2005 inITA.433/2005-2006 5. against the order of the Commissioner ofIncome Tax (Appeals)IX, Chennai in IT Appeal No.53/2005-2006dated 21.6.2005 6. against the Commissioner of Income Tax(Appeals)IV, Chennai dated 19.02.2007 in Appeal No.CIT(A) IV,CHE/449/06-07 7. against the order of the Commissioner of IncomeTax (A) IV, Chennai in Appeal No. CIT (A) IV/CHE/448/06-07 whichare preferred 1. against the order of the Income Tax Officer,Ward I (1) Karaikudi dated 18.3.2005 and made in PAN/GIR/NO.512-https://hcservices.ecourts.gov.in/hcservices/C/1 (1) 2. against the order of the Income Tax Officer Ward I (5) Vellore dated 28.3.2006 in PAN/GIR.No.,AVIPS522OR/21401 S3. against the order of the Income Officer, Salary Ward III (1)Chennai dated 29.12.2006 and made in ABGPB1188H; 4. against theorder of the Assistant Commissioner of Income Tax, Circle I,Tambaram, Chennai-45 dated 20.10.2005 in PAN GIR AAGPN7484B5. against the order of the Income Tax Officer Ward I (5)Velloredated 14.3.2005 in APN/GIR No.AAFPT 8596F/21309-T 6.against theorder of the Deputy Commissioner of Income Tax, Salary CircleIII, IV Floor, New Block No.121, Mahatma Gandhi Salai,Nungambakkam, Chennai.34. dated 26.12.2006 in PAN.No.AAEPC 4275 B7. against the order of the Deputy Commissioner of Income Tax,Salary Circle III, (V) Floor, New Block, 121, Nungambakkam HighRoad, Chennai.34 dated 26.12.2006 in PAN.No. . For Appellants : Mr.J.Narayanasamy, Standing Counsel for IT DepartmentFor Respondents: Mr.Quadir Hoseyn (T.C.(A). 101/2007) Mr.A.Palaniappan (T.C.(A). 419/2007) No appearance (T.C.(A). 22/2007) Mr.J.Balachander, for Mr.S.Sridhar (T.C.(A). 425/2007) No appearance (T.C.(A). 1360/2007) Mr.C.V.Rajan (T.C.(As.) 1353 and1397 of 2007 In these appeals, the revenue assails the order of theTribunal granting the relief of deduction under section 10(10C)of the Income Tax Act, 1961 to the respective assessees, who havesevered their service connection from their employer – the ICICIBank and the Reserve Bank of India, under a scheme framed in theyear 2003 called 'ICICI Bank Early Retirement Option 2003' and'Optional Early Retirement Scheme (OERS) 2003' respectively. 2. Tax Case (Appeals) Nos.101, 410, 22, 425 and 1360 of 2007relate to the employees of ICICI bank and Tax Case (Appeals)Nos.1353 and 1397 of 2007 relate to the employees of Reserve Bankof India. 3. As the relief sought for; the contentions raised and theultimate decision rendered are one and the same, except theassessees in each of the appeals, these appeals are takentogether and are disposed of by this common order. Tax case(Appeal) No.101 of 2007 is taken as a typical case in respect ofhttps://hcservices.ecourts.gov.in/hcservices/the employees of the ICICI bank and Tax Case (Appeal) No.1353 of 207 is taken as a typical case in respect of the employees ofReserve Bank of India. Tax Case Appeal No.101 of 2007 (ICICI Bank Ltd.) 4. The assessee filed return of income for the assessmentyear 2004-05 on 10.10.2004 admitting the income of Rs.4,25,310/-.A scrutiny assessment was initiated in the case of assessee. Theassessee claimed deduction under section 10(10C) of the IncomeTax Act, 1961 for a sum of Rs.5.00 lakhs from the benefitreceived on his voluntary retirement under the scheme called"Early Retirement Option Scheme". During the course of scrutinyproceedings, the assessee was required to file a copy of thescheme so as to find out whether the assessee was entitled to thebenefit under section section 10(10C) of the Income Tax Act.The assessee, by his letter dated 07.03.2005, has stated that thescheme was not available and hence could not produce the same.The assessing officer, in the absence of scheme, was of the viewthat the assessee was not entitled to deduction under section 10(10C). On that reasoning, the claim of the assessee wasdisallowed by observing as follows : "The assessee claimed deduction under section 10(10C) ofthe Income tax Act of Rs.5 lakhs from his benefitsreceived on his voluntary retirement. In this connectionhe was asked to file a copy of the Employees Retirementoption Scheme by which he has availed voluntaryretirement. In his letter dated 07.03.2005 he statedthat the scheme is not available and hence he could notfile the same. Therefore, in the absence of any schemeapproved for Voluntary Retirement from the employer, itcannot be allowed any deduction under section 10(10C).Therefore, the assessee's claim under section 10(10C) isdisallowed." 5. The assessee went on appeal to the Commissioner of IncomeTax (Appeals). Even before the Commissioner, the assessee wasrequired to furnish a copy of the retirement scheme of the bank.However, the assessee did not file the copy, but claimed that theother employees availed the deduction and therefore, thededuction claimed by the assessee should be allowed. TheCommissioner (Appeals) ultimately concluded by observing asfollows :"The assessing officer afforded an opportunity to theappellant and required him to file copy of the scheme ofICICI bank by which the appellant availed voluntaryretirement. The appellant has replied in writing that thescheme was not applicable to him. During the course ofappellate proceedings, the appellant could not submit copyof scheme of voluntary retirement. In the circumstances, Ifind that the assessing officer has correctly denied thededuction under section 10(10C). The order of theassessing officer is confirmed."https://hcservices.ecourts.gov.in/hcservices/ 6. On further appeal to the Tribunal, at the instance of theassessee, the Tribunal after narrating the facts culminating thefiling of the appeal before it observed as under :"The Assessing Officer disallowed the claim of theassessee since the assessee had not filed the details ofthe Employees Retirement Option Scheme. The CIT (A) alsoconfirmed the order of the assessing officer on the sameground. Now, the assessee before us, during the course ofhearing, filed a copy of Early Retirement Option 2003 fromhis employer ICICI Bank Limited, which is called as "TheICICI Bank Early Retirement Option, 2003". In this viewof the matter, we have no hesitation in upholding the claimof the assessee for the relief under section 10(10C).Accordingly, this appeal of the assessee is allowed."The correctness of the same is canvassed in Tax Case (Appeal)No.101 of 2007 by raising the following questions of law: 1. Whether in the facts and circumstances of the case, theTribunal was right in holding that the assessee is eligible forthe benefit of section 10(10C), without even going into thedetails of the early Retirement Option Scheme to see if itfulfils the criteria laid down for Voluntary RetirementSchemes?2. Whether on the facts and circumstances of the case, theTribunal was right in holding that the assessee is entitled todeduction under section 10(10C), when the scheme under whichthe amount was paid does not fulfil the criteria prescribedunder Rule 2BA of the Income Tax Rules?As already stated, the other tax case appeals are identical tothis appeal.Tax Case Appeal No.1353 of 2007 (Reserve Bank of India) 7. The assessee was the employee of Reserve Bank of India,Chennai. She retired voluntarily under the Optional EarlyRetirement Scheme and cash compensation in a sum ofRs.15,62,960/- was received by her. The employer has deducted taxin a sum of Rs.4,81,000/- from the payment related to the earlyretirement offer. The assessee filed return of income for theassessment year 2004-05 admitting a total income ofRs.15,62,960/-. The assessee claimed deduction under section 10(10C) of the Act to the extent of Rs.5.00 lakhs. The assesseefiled a revised return on 2[nd] December 2004 admitting a revisedincome of Rs.1,06,900/- and claimed refund of Rs.2,15,186/-. Thereturn of income was processed under section 143(1) of the Actand a refund of Rs.2,25,946/- was granted to the assessee withinterest under section 244-A of the Act. 8. Notice under section 143(2) of the Act was served on theassessee. The assessing officer, taking note of the scheme withreference to the statutory provisions and the instructions of theJoint Commissioner of Income Tax dated 29.11.2006 has heldagainst the assessee as he was of the view that the scheme framedhttps://hcservices.ecourts.gov.in/hcservices/by the Reserve Bank of India does not fulfil the conditions enumerated in clauses (iii) and (iv) of Rule 2BA of the IncomeTax Rules. 8. Notice under section 143(2) of the Act was served on theassessee. The assessing officer, taking note of the scheme withreference to the statutory provisions and the instructions of theJoint Commissioner of Income Tax dated 29.11.2006 has heldagainst the assessee as he was of the view that the scheme framedhttps://hcservices.ecourts.gov.in/hcservices/by the Reserve Bank of India does not fulfil the conditions enumerated in clauses (iii) and (iv) of Rule 2BA of the IncomeTax Rules. 9. The assessee filed an appeal before the Commissioner ofIncome Tax (Appeals), who by his order dated 19.02.2007 takingnote of the letter of the Reserve Bank of India explaining thescope of the section and also taking note of the relevant clausein the scheme has ultimately held that the assessing officer wasjustified in denying exemption under section 10(10C) of the Act.The assessee carried the matter on further appeal to theTribunal. 10.The Tribunal finding that the issue stood covered infavour of the assessee by the decision of the Tribunal renderedin the case of Vaishali A.Shelar in ITA No.6384(Mum)/2006 heldthat the assessee was entitled to the relief under section 10(10C) in respect of the sums received under OERS upto a sum ofRs.5 lakhs. That order is assailed before us by the revenue byraising the following questions of law:1. Whether in the facts and circumstances of the case, theTribunal was right in holding that the assessee is eligible forthe benefit of section 10(10C), without even going into thedetails of the early Retirement Option Scheme to see if itfulfils the criteria laid down for Voluntary RetirementSchemes? 2. Whether on the facts and circumstances of the case, theTribunal was right in holding that the assessee is entitled todeduction under section 10(10C), when the scheme under whichthe amount was paid does not fulfil the criteria prescribedunder Rule 2BA of the Income Tax Rules? 11. Heard the learned counsel on either side and perused thematerials available on record. 12. As the claim is made under section 10(10C) of the IncomeTax Act, we are of the view that the relevant provision has to beextracted : "10. Incomes not included in total income.--In computingthe total income of a previous year of any person, anyincome falling within any of the following clauses shallnot be included--.................(10C) any amount received by an employee of --(i) a public sector company; or(ii) any other company; or(iii) an authority established under a Central, State orProvincial Act; or (iv) a local authority; or (v) a co-operative society; or https://hcservices.ecourts.gov.in/hcservices/ (vi) a University established or incorporated by orunder a Central, State or Provincial Act and aninstitution declared to be a University under section 3of the University Grants Commission Act, 1956 (3 of 1956); or (vii) an Indian Institute of Technology within themeaning of clause (g) of section 3 of the Institutes ofTechnology Act, 1961 (59 of 1961) ; or (viia) any State Government ; or (viib) the Central Government ; or (viic) an institution, having importance throughoutIndia or in any State or States, as the CentralGovernment may, by notification in the Official Gazette,specify in this behalf ; or https://hcservices.ecourts.gov.in/hcservices/ (vi) a University established or incorporated by orunder a Central, State or Provincial Act and aninstitution declared to be a University under section 3of the University Grants Commission Act, 1956 (3 of 1956); or (vii) an Indian Institute of Technology within themeaning of clause (g) of section 3 of the Institutes ofTechnology Act, 1961 (59 of 1961) ; or (viia) any State Government ; or (viib) the Central Government ; or (viic) an institution, having importance throughoutIndia or in any State or States, as the CentralGovernment may, by notification in the Official Gazette,specify in this behalf ; or (viii) such institute of management as the CentralGovernment may, by notification in the Official Gazette,specify in this behalf, at the time of his voluntaryretirement or termination of his service, in accordancewith any scheme or schemes of voluntary retirement or inthe case of a public sector company referred to in sub-clause (i), a scheme of voluntary separation, to theextent such amount does not exceed five lakh rupees :Provided that the schemes of the said companies orauthorities or societies or Universities or theInstitutes referred to in sub-clauses (vii) and (viii),as the case may be, governing the payment of such amountare framed in accordance with such guidelines (including,inter alia, criteria of economic viability) as may be:Provided further that where exemption has beenallowed to an employee under this clause for anyassessment year, no exemption thereunder shall be allowedto him in relation to any other assessment year;"The relevant statutory rule pertaining to the scheme is Rule2BA of the Income Tax Rules which reads as follows : (iii) an authority established under a Central,State or Provincial Act; or (iv) a local authority, or https://hcservices.ecourts.gov.in/hcservices/ under a Central, State or Provincial Act and aninstitution declared to be a University under section 3of the University Grants Commission Act, 1956 (3 of1956) or(vii) an Indian Institute of Technology withinthe meaning of clause (g) of section 3 of the Institutesof Technology Act, 1961 (59 of 1961) (viii) such institute of management as the CentralGovernment may, by notification in the Official Gazette,specify in this behalf, at the time of his voluntary retirement, or voluntaryseparation shall be exempt under clause (10C) of section10 only if the scheme of voluntary retirement framed bythe aforesaid company or authority, or co-operativesociety or University or institute, as the case may be,@or if the scheme of voluntary separation framed by apublic sector company is in accordance with thefollowing requirements, namely:-- (i) it applies to an employee who has completed10 years of service or completed 40 years of age; (ii) it applies to all employees (by whatevername called) including workers and executives of acompany or of an authority or of a co-operative society,as the case may be, excepting Directors of a company orof a co-operative society; (iii) the scheme of voluntary retirement orvoluntary separation has been drawn to result in overallreduction in the existing strength of the employees ; (iv) the vacancy caused by voluntary retirement@or voluntary separation is not to be filled up; (v) the retiring employee of a company shall notbe employed in another company or concern belonging tothe same management; (vi) the amount receivable on account ofvoluntary retirement or voluntary separation of theemployee does not exceed the amount equivalent to threemonth's salary for each completed year of service orsalary at the time of retirement multiplied by thebalance months service left before the date of hisretirement superannuation. (iii) the scheme of voluntary retirement orvoluntary separation has been drawn to result in overallreduction in the existing strength of the employees ; (iv) the vacancy caused by voluntary retirement@or voluntary separation is not to be filled up; (v) the retiring employee of a company shall notbe employed in another company or concern belonging tothe same management; (vi) the amount receivable on account ofvoluntary retirement or voluntary separation of theemployee does not exceed the amount equivalent to threemonth's salary for each completed year of service orsalary at the time of retirement multiplied by thebalance months service left before the date of hisretirement superannuation. Provided that requirement of (i) above would not beapplicable in case of amount received by an employee ofa public sector company under the scheme of voluntaryhttps://hcservices.ecourts.gov.in/hcservices/separation framed by such public sector company. 13. As per above provisions, any amount received by anemployee on his voluntary retirement or termination of hisservice in accordance with the scheme or schemes of voluntaryretirement or in the case of public sector company referred toin sub clause (1) of the scheme, voluntary separation to theextent such an amount does not exceed Rs.5.00 lakhs. The provisoto section 10(10C) requires the scheme governing the payment ofsuch amount to be framed in accordance with the guidelinesincluding, inter alia, criteria of economic viability as may beprescribed. The statutory rules provide that the voluntaryretirement or voluntary separation benefit shall be extendedunder section 10(10C) only if the scheme of voluntary retirementor voluntary separation framed is in accordance with therequirements stated therein. 14. Now, let us consider the scheme framed by therespective banks. Clause (2) of the scheme framed by ICICI bankLtd., read as follows : 2. Need for introduction of the Scheme :The competitive landscape has been changing veryrapidly particularly in the last couple of years. Therehas been paradigm shift in the competitive environmentnecessitating fresh look at the business strategies weadopt and implement. This leaves a significant impact onthe way we do business, and all other components of theorganization – including its employees. A combativemulti-prolonged strategy to out-execute competition isthe need of the hour. Additionally, capability and skillenhancement of employees requires a priority attention.Appropriate response from employees is crucial forachieving the organizational goals. Some of our employees find the current environment toopressurizing. Many of them, who have been with theorganization for a long period of time have regularlyexpressed a desire to have an early exit option. Thescheme is being introduced in response to the competitiveenvironment on the one hand and the desire of employeeson the other."The object for introduction of Optional Early Retirement Schemein the Reserve Bank of India, as set out in its AdministrationCircular No.1 dated 11.08.2003 reads as under :Introduction of Option Early Retirement SchemeAs a result of several innovative measures taken by theBank during the last 2/3 years, a need has arisen forproviding some alternative optional facilities and workopportunities to our staff, providing training andreskilling opportunities and such other measures whichare location specific and which can provide additionalbenefits to the staff/officers who wish to avail of them.Several suggestions were made to the management that, inhttps://hcservices.ecourts.gov.in/hcservices/the altered context, some of the employees would like to look at an opportunity to seek retirement at their owndiscretion provided the scheme is attractive and providesthem with additional financial benefits so that they canpursue other interests actively. Accordingly, it hasbeen decided to introduce Optional Early RetirementScheme (OERS) as given in the annexure, which has beenapproved by the Committee of the Central Board at theirmeeting held on 6[th] August, 2003." 15. From the above, it is obvious that the scheme has beenintroduced for the purpose of enhancement of the competitiveenvironment of the employer banks. The competitive environmentwas sought to be achieved by getting rid of the employer'sunproductive and unwanted employees making them to leavevoluntarily by granting some incentive for doing so. Such pruningof unproductive and unwanted employees benefits the speedycompetitive growth and prosperity of the employer bank which alsohave a bearing on the national economy. In addition to that, theschemes are the outcome to fulfil the desire of the employees,who found the competitive environment too pressurizing to themand expressed their desire to have an early exit with somebenefits. It is also relevant to mention here that during therelevant period a private schedule bank merged with ICICI bankLtd. 16. From the reading of various clauses contained in thescheme, it is manifest that the scheme was not intended as staffreduction measure, but a soft exit option made available to thoseinterested employees who were seeking alternative option to thelevel of adaptability and change, that the current environmentaldemands or those who are desirous of early retirement after along and exhaustive period of service with the organisation.Thus, the schemes framed are not in accordance with therequirement of Rule 2BA of the Income Tax Rules. The requirementof the statutory provisions is that the exemption from tax undersection 10(10C) is available on the amount received under ascheme of voluntary retirement or a voluntary separation framedin accordance with the guidelines prescribed and specified inRule 2B. As the schemes had not been introduced for the purposeof making-over the reduction in the existing strength of theemployees and do not provide that the vacancy caused by thevoluntary retirement or voluntary separation shall not be filledup, the requirements (iii) and (iv) of Rule 2BA have not beenfulfilled. 17. The employers who are the authors of the schemes, thebetter persons to explain as to how they conceived the schemes,informed the department in the following manner :ICICI 1. Under section 10(10C) of the Act, exemption from taxis available on amounts received under scheme ofhttps://hcservices.ecourts.gov.in/hcservices/voluntary retirement or scheme of voluntary separation framed in accordance with the guidelines prescribed inrule 2BA of the Rules. As explained earlier, since theERO 2003 scheme of the bank does not satisfy all therequirements specified in Rule 2BA of the Rules, thecompensation paid under this scheme does not qualifyfor the exemption under section 10(10C). 17. The employers who are the authors of the schemes, thebetter persons to explain as to how they conceived the schemes,informed the department in the following manner :ICICI 1. Under section 10(10C) of the Act, exemption from taxis available on amounts received under scheme ofhttps://hcservices.ecourts.gov.in/hcservices/voluntary retirement or scheme of voluntary separation framed in accordance with the guidelines prescribed inrule 2BA of the Rules. As explained earlier, since theERO 2003 scheme of the bank does not satisfy all therequirements specified in Rule 2BA of the Rules, thecompensation paid under this scheme does not qualifyfor the exemption under section 10(10C). 2. One of the important conditions specified foreligibility of ERO scheme for tax exemption undersection 10(10C) is that the vacancy caused by thevoluntary retirement or voluntary separation is notfilled in. It may be noted that the ICICI bank ERO2003 scheme was not intended as a staff reduction buta soft exit option to address the interest of those ofits employees who were seeking alternative options tothe level of adaptability and change that the currentenvironment demands or those who are desirous of earlyretirement after a long period of service with theorganization. The same is brought out in point no.2of the ICICI Bank IRO Scheme 2003, copy of which isenclosed as Annexure for your reference. Hence, it isobserved that the bank had adopted proactivestrategies to meet the competitive challenges in thefinancial services sector and therefore, required avibrant and flexibile organization capable of swiftyadapting to the demands of change. The vacanciescaused on account of soft exit option of the employeewere proposed to be filled in through replacements atlower costs. 3. As per the provisions of section 10(10C) read withRule 2BA, the exemption is available to scheme ofvoluntary retirement offered to employees who havecompleted 10 years of service or completed 40 years ofage. However, the ICICI bank ERO 2003 scheme did notfulfil this condition also as it was offered toemployees who had completed at least 7 years ofservice and completed 40 years of age as on July 31,2003. The same is brought out in point no.4 of theICICI Bank ERO Scheme 2003, copy of which is enclosedas Annexure for your reference.Rule 2BA, the exemption is available to scheme ofvoluntary retirement offered to employees who havecompleted 10 years of service or completed 40 years ofage. However, the ICICI bank ERO 2003 scheme did notfulfil this condition also as it was offered toemployees who had completed at least 7 years ofservice and completed 40 years of age as on July 31,2003. The same is brought out in point no.4 of theICICI Bank ERO Scheme 2003, copy of which is enclosedas Annexure for your reference. 4. As our ERO scheme could not be designed as aneligible scheme enjoying exemption under 10(10C),ICICI Bank as the person responsible for paying anyincome chargeable under the head 'salaries' deductedtax at source from salaries of ERO optees withoutgrant of exemption under section 10(10C) in accordancewith the provisions of section 192."eligible scheme enjoying exemption under 10(10C),ICICI Bank as the person responsible for paying anyincome chargeable under the head 'salaries' deductedtax at source from salaries of ERO optees withoutgrant of exemption under section 10(10C) in accordancewith the provisions of section 192."RBI's communication dated 19.04.2005 : (c) Clause (iii) of Rule 2BA provides that the schemeshould have been framed in order to result in overallreduction in the existing strength of employees. Bank'soptional Early Retirement Scheme has not been framed forthat purpose but for providing some alternative optional https://hcservices.ecourts.gov.in/hcservices/ (c) Clause (iii) of Rule 2BA provides that the schemeshould have been framed in order to result in overallreduction in the existing strength of employees. Bank'soptional Early Retirement Scheme has not been framed forthat purpose but for providing some alternative optional https://hcservices.ecourts.gov.in/hcservices/ facilities and work opportunities to the Bank staff.(d)Clause (iv) of Rule 2BA provides that the vacancycaused by voluntary retirement is not to be filled up.Bank has not bound itself not to fill up the vacanciesarising out of ORES. It is open to the Bank to makeneed based recruitment against such vacancies, if andwhen considered appropriate by the Bank.(e)Under the bank's scheme, the employee was eligiblefor Ex-gratia amount equal to pay plus dearnessallowance for the number of years of actual completedyear of service or part thereof in excess of six monthsor pay plus dearness allowance for remaining months ofservice reckoned up to the date on which the employeewould retire on superannuation, whichever is less.Accordingly, in view of the differences between the BankOERS and the guidelines laid down in Rule 2BA of the ITRules, the ex-gratia paid under Bank's scheme does notqualify for exemption under section 10(10C) of the ITAct. As such, the Bank has not allowed the exemptionunder section 10 (10C) of the IT Act, 1961, to theemployees who had opted for OERS. 18. In order to entitle the person the benefit undersection 10(10C) of the Act the provisions of section 10(10C) andRule 2BA should be complied with cumulatively and compliance ofsome of them would not entitle the employee the benefit asclaimed for. 19. CBDT Circular No.640 has also clarified that if all theconditions specified in section 10(10) and Rule 2BA of the Rulesare satisfied, then only the assessee would be entitled to thebenefit and in those cases, the employer need not deduct atsource. Thus, it is clear that the scheme is not strictly inaccordance with section 10(10C) and Rule 2BA. 20. For the foregoing reasons, we are not in acceptance withthe order of the Tribunal. Accordingly the order of the tribunalis set aside and the appeals are allowed answering the questionof law in favour of the revenue. Sd/-Asst. Registrar. /true copy/ Sub Asst. Registrar. To 1. The Assistant RegistrarThe Income Tax Appeal Tribunal121 Nungambakkam High Road,Chennai. 2. The Commissioner of Income Tax Appeals IMadurai. 3. The Commissioner of Income Tax (A) IX121, Mahatma Gandhi Road, Chennai. 4. The Commissioner of Income Tax (Appeals) IVChennai. 5. The Income Tax Officer Ward I (1) Karaikudi. 6. The Income Tax Officer Ward I (5) Vellore. 7. The Income Tax Officer Ward III (1) Chennai. 8. The Assistant Commissioner of Income Tax,Circle I, Tambaram, Chennai-45. 9. The Deputy Commissioner of Income TaxSalary Circle III, IV, Floor, New Block 121, Mahatma Gandhi Salai,Nungambakkam, Chennai-34 10. The Commissioner of Income Tax,Tamilnadu II,Madras. 11. The Commissioner of Income Tax, Madurai. 12. The Commissioner of Income Tax, Chennai.7 ccs to M/s. Pushya Sitaraman, Advocate, Sr. 10184,10177,10178,10182, 10183, 10179, 101812 ccs to Mr.C.V. Rajan, Advocate, Sr.10282, 10279 T C (As).101, 419, 22, 425 & 1360/2007and 1353 and 1397 of 2007BV (CO)kk 31/3 https://hcservices.ecourts.gov.in/hcservices/