The Commissioner Of Income Tax,Tiruchirapalli v. M.abdul Kareem

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17.7.2007 CORAM THE HON'BLE MR.JUSTICE K.RAVIRAJA PANDIANAND THE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA TAX CASE Appeal No.1058 OF 2007and M.P.No.1 of 2007 The Commissioner of Income Tax,Tiruchirapalli ... Appellant Versus M.Abdul Kareem ... Respondent Prayer: Appeal preferred under Section 260A of the Income-tax Act,1961 against the order of the Income-tax Appellate Tribunal, C Bench,Chennai dated 30.12.2005 in I.T.A.No.776/Mds/2004 for the assessment year2001-02 against the order of the Commissioner of Income Tax (Appeals),Trichirapalli in ITA.No.2/2003-04 dated 14.01.2004 for the assessment year2001-02 against the order of Assistant Commissioner of Income Tax, CircleI, Thanjavur dated 07.02.2004 GIR.No.824-A for the Assessment year 2001-2002. For Appellant : Mr.T.Ravikumar Standing Counsel for IT JUDGMENT (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN,J.) This Tax Case Appeal has been filed by the Revenue against the orderof the Income-tax Appellate Tribunal, C Bench, Chennai dated 30.12.2005made in I.T.A.No.776/Mds/2004 for the assessment year 2001-02. Thesubstantial question of law formulated for entertainment of the appeal isas follows:- "Whether in the facts and circumstances of the case,the Tribunal was right in holding that the assessee iseligible to claim simultaneous benefit under Section 10(10C)as well as section 89(1) in respect of the compensationreceived under the voluntary retirement scheme ?" https://hcservices.ecourts.gov.in/hcservices/ 2. The issue relates to the assessment year 2001-2002. The assesseewas an employee of Canara Bank. During the previous year relevant to theassessment year 2001-2002, the assessee retired from service from the Bankunder the voluntary retirement scheme. On retirement, the assesseereceived from the employer bank several retirement dues includingexgratia. The exgratia had been worked out by the employer at 60 dayssalary for each completed year of service or salary for the number ofmonths of service left, which ever was less. Out of the exgratia thusreceived, the assessee claimed exemption of Rs.5 lakhs. As per theprovisions of Section 10(10C) of the Act, the balance exgratia wasadmitted as income. However, while working out the tax payable on suchincome, the assessee claimed relief under Section 89(1). 3. The assessing officer rejected the claim of the assessee for therelief under Section 89(1) of the Act and completed the assessment bygranting exemption under Section 10(10C) of the Act. Aggrieved over thesame, the assessee preferred appeal before the Commissioner of Income-tax (Appeals), which appeal was allowed by the Commissioner of Income-tax(Appeals). Questioning the correctness of the order of the Commissioner ofIncome-tax (Appeals), the revenue preferred further appeal before theIncome-tax Appellate tribunal and the Tribunal dismissed the appealpreferred by the revenue. Aggrieved by the order of the Income-taxAppellate Tribunal, the revenue filed the present appeal under Section260-A oft he Income-tax Act, 1961. 3. The assessing officer rejected the claim of the assessee for therelief under Section 89(1) of the Act and completed the assessment bygranting exemption under Section 10(10C) of the Act. Aggrieved over thesame, the assessee preferred appeal before the Commissioner of Income-tax (Appeals), which appeal was allowed by the Commissioner of Income-tax(Appeals). Questioning the correctness of the order of the Commissioner ofIncome-tax (Appeals), the revenue preferred further appeal before theIncome-tax Appellate tribunal and the Tribunal dismissed the appealpreferred by the revenue. Aggrieved by the order of the Income-taxAppellate Tribunal, the revenue filed the present appeal under Section260-A oft he Income-tax Act, 1961. 4. The core contention in the appeal on behalf of the revenue is thatthe order of the Tribunal holding that the assessee is eligible to claimrelief both under Section 10(10C) and 89(1) simultaneously cannot belegally sustainable. When a specific provision has been introduced forgrant of exemption of the amounts received under the voluntary retirementscheme, it would no longer be available to the assessee to seek to gounder the General Clauses for the amount in excess of the exemptiongranted. The said provision Section 10(10C) has been introduced only forthe benefit of the assessee who opts for voluntary retirement. If theassessee merely sought to treat income as salary, then the only benefitavailable is under Section 89(1). Then, the assessee would have to paymore amount by way of tax. Section 89(1) provides, where an assessee is inreceipt of a sum in the nature of salary, being paid in any financial yearof salary for more than twelve months or a payment which under theprovisions of clause (3) of section 17 is a profit in lieu of salary, hisincome is assessed at a higher rate than that at which it would otherwisehave been assessed. In view of the above provision, the order of theTribunal granting the relief to the assessee both under Section 10(1)C)and 89(1) of the Act cannot be legally sustainable. 10. The very issue as to the correctness of granting the relief underSections 10(10C) and 89(1) to assessee, who voluntarily retired fromservice, was the subject matter of consideration before the Division Bench of this Court in the case of COMMISSIONER OF INCOME-TAX VS.G.V.VENUGOPAL ((2005) 273 ITR 307). In that case, the Division Bench hasheld that the notions of equity do not apply in taxing statutes. If theassessee is entitled to two different benefits on the plain language ofthe statute, he has to be granted both those benefits. There are severalprovisions granting twin or double benefits, while in other provisions,twin or double benefit has been specifically prohibited. There is noprohibition to the twin benefit in respect of the amount received underthe voluntary retirement scheme. The relief contemplated under Section 89(1) of the Act is aimed to mitigate the hardship that may be caused onaccount of the high incidence of tax due to progressive increase in taxrates and thus held that the benefit under Sections 10(CC) and 89(1) couldbe granted to the assessees. The judgment squarely answers the issue.Hence, the appeal is dismissed. Sd/Asst.Registrar To /true copy/Sub Asst.Registrar 1.The Assistant Registrar, Income-Tax Appellate Tribunal, "C'Bench, III Floor, Rajaji Bhavan, Besant Nagar, Madras 90 (with records five copies). 2. The Commissioner of Income Tax (Appeals)Tiruchirapalli. 3. The Assistant Commissioner of Income Tax,Cricle I, Thanjavur. 1 cc To Mr.N.Muralikumaran, Advocate, SR.43596. Tax Case (Appeal) No.1058 of 2007GG(CO)RVL 01.08.2007