MR. PRABHAKAR,CHENNAI vs. ACIT, CENTRAL CIRCLE-3(1), CHENNAI

आयकरअपील�यअ�धकरण ’बी’ �यायपीठ,चे�नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI �ी मनुकुमारिग�र, �ाियक सद� एवं �ी एस. आर. रघुनाथा लेखासद� BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No. 3701/Chny/2025 �नधा�रण वष�/Assessment Years: 2019-20 RAMIREDDY SAMBASIVA v. The Income Tax Officer, REDDY Non Corporate Ward-8(1), 104 E6 Prathiv Apartments, Chennai-600034 Kaliamman Koil Street, Virugambakkam, Chennai 600092 [PAN: AGBPR 8462 N] (अपीलाथ�\Appellant) (��यथ�\Respondent)

अपीलाथ� क ओर से/ Appellant by : Mr. Y. Sridhar, CA ��यथ� क ओर से /Respondent by : Mr. E. Elango, JCIT सुनवाई क तार�ख/Date of Hearing : 13.08.2026 घोषणा क तार�ख /Date of : 14.10.2026 Pronouncement आदेश / O R D E R PER MANU KUMAR GIRI, JM:

The captioned appeal filed by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "the Ld. CIT(A)"], dated 19.10.2025, confirming the assessment order passed u/s. 143(3) r.w.s 144B of the Income Tax Act, 1961 ("the Act"), for the Assessment Year ("AY") 2019-20.

ITA No. 3701/Chny/2025 (A Y 2019-20) Ramireddy Sambasiva Reddy Vs ITO NCW-8(1) :: 2 :: 2. The assessee has raised the following grounds of appeal as under: - 1. The Learned CIT(A) has erred in confirming the decision of AO treating the amounts of Rs. 76,60,495/- as Income from Other Source u/s. 56(2)(xi) and has thereby erred on Facts and Law by confirming the Assessment as completed by the AO. 2. The Learned CIT(A) has erred by not considering the claim of the Appellant, of the said amounts being Capital Receipts, because the same was received only due to premature cessation of his employment and permanent loss of Source of Income. The CIT(A) has failed to attend and adjudicate the claim and has brought nothing on record to refute the claim of Capital Receipts. 3. The Learned CIT(A) has erred by not considering the jurisdictional and binding Judgement of Pune ITAT, Mumbai ITAT and other Judgment of various High Courts and of Hon'ble Supreme Court. The Learned CIT(A) has erred in not applying all the legal citations. The Learned CIT(A) was bound to consider the squarely applicable Judgements of Pune and Mumbai ITAT on the principles of binding precedence. 4. The Appellant Craves Leave to add, Alter, or amend any of the Grounds of the Appeal, before or during hearing of the Appeal.

ITA No. 3701/Chny/2025 (A Y 2019-20) Ramireddy Sambasiva Reddy Vs ITO NCW-8(1) :: 3 :: Income Tax Act, 1961 (“the Act”), determining the total income at Rs.93,26,825/-, inter alia, by making an addition of Rs.76,60,495/- under the head “Income from Other Sources”. 3.1 During the relevant previous year, the employer introduced a scheme titled “Pfizer Health Care India Pvt. Ltd. – Financial Scheme for Employees at IKKT, 2019”, consequent upon its decision to cease manufacturing operations at its Irungattukottai plant owing to a significant long-term decline in product demand. The assessee opted for the scheme and received a lump-sum payment of Rs.76,60,495/- on cessation of employment. The assessee contended before the Assessing Officer that the cessation of employment was occasioned by the employer’s decision to close the manufacturing plant and was not a voluntary retirement in the true sense. It was submitted that the amount received represented compensation for the loss of the source of employment and was, therefore, a capital receipt not chargeable to tax. The Assessing Officer rejected the explanation and held that the payment was taxable under section 56(2)(xi) of the Act, inserted by the Finance Act, 2018, with effect from 01.04.2019. Accordingly, the addition of Rs.76,60,495/- was made. 4. On appeal, the Ld. CIT(A), after considering the facts of the case and the provisions of section 56(2)(xi) of the Act, confirmed the action of the Assessing Officer in treating the compensation received by the assessee as taxable income under the head “Income from Other Sources”. The Ld. CIT(A) did not accept the assessee’s contention that the payment was a capital receipt arising from the loss of the source of employment. The Ld. CIT(A) upheld the

ITA No. 3701/Chny/2025 (A Y 2019-20) Ramireddy Sambasiva Reddy Vs ITO NCW-8(1) :: 4 :: addition, against which the assessee is in appeal before the Tribunal. 5. The Ld. Authorised Representative (“AR”) submitted that the assessee was compelled to cease employment on account of the employer’s decision to shut down its manufacturing plant at Irungattukottai. The scheme, though described as voluntary, was introduced in the backdrop of the closure of the plant, leaving the employees with no practical alternative but to accept the settlement offered by the employer. It was contended that the lump-sum payment of Rs.76,60,495/- was received on account of the premature cessation of employment and the consequent loss of the source of income. The receipt was not in the nature of salary for services rendered or compensation payable under any enforceable service obligation, but was an ex-gratia payment arising from the cessation of employment. Accordingly, the same was claimed to be a capital receipt not chargeable to tax. 6. The Ld. AR further submitted that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the case of Subramanian Kathirsen v. ITO, ITA No.765/Chny/2025, dated 02.09.2025, wherein, under similar circumstances involving compensation received from Pfizer Healthcare India Pvt. Ltd. consequent upon closure of its manufacturing plant, the Tribunal held that the ex-gratia payment was capital in nature and directed deletion of the addition. The Ld. AR also relied upon the judicial precedents discussed in the aforesaid decision, particularly the decision of the Pune Bench of the Tribunal in Atul Shashikant Garbhe v. ITO, ITA No.863/PUN/2024, dated 17.09.2024, and submitted that the impugned addition deserves to be deleted.

ITA No. 3701/Chny/2025 (A Y 2019-20) Ramireddy Sambasiva Reddy Vs ITO NCW-8(1) :: 5 :: 7. The Ld. Departmental Representative (“DR”), on the other hand, supported the orders of the lower authorities. It was submitted that the payment was received by the assessee in connection with the termination of employment and was, therefore, covered by the express provisions of section 56(2)(xi) of the Act. The Revenue accordingly pleaded that the addition made by the Assessing Officer and confirmed by the Ld. CIT(A) be sustained. 8. We have heard the rival submissions, perused the material available on record and considered the orders of the authorities below. The issue for our consideration is whether the lump-sum ex- gratia payment of Rs.76,60,495/- received by the assessee pursuant to the closure of the manufacturing plant of his employer is liable to tax under section 56(2)(xi) of the Act or is a capital receipt not chargeable to tax. 9. We find that the issue under consideration is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the case of Subramanian Kathirsen v. ITO, ITA No.765/Chny/2025, dated 02.09.2025, for the same assessment year and involving compensation received from the same employer in the context of closure of its manufacturing operations. 10. In the aforesaid case, the Co-ordinate Bench of Tribunal considered the decisions of various Benches, including the Pune Bench in Atul Shashikant Garbhe v. ITO, ITA No.863/PUN/2024, dated 17.09.2024. The Tribunal, following the judicial precedents discussed therein, held that the ex-gratia compensation received by the assessee on cessation of employment was capital in nature and not taxable. Accordingly, the addition sustained by the Ld. CIT(A) was directed to be deleted.

ITA No. 3701/Chny/2025 (A Y 2019-20) Ramireddy Sambasiva Reddy Vs ITO NCW-8(1) :: 6 :: 11. In the present case also, the material facts are substantially identical. The assessee received the impugned amount pursuant to a scheme introduced by the employer following its decision to close the manufacturing plant at Irungattukottai. The payment arose in the context of cessation of employment consequent upon the closure of the manufacturing operations. The nature and circumstances of the receipt are, therefore, materially similar to those considered by the Co-ordinate Bench in Subramanian Kathirsen (supra). 12. Respectfully following the decision of the Co-ordinate Bench in Subramanian Kathirsen v. ITO, ITA No.765/Chny/2025, dated 02.09.2025, we hold that the impugned ex-gratia payment of Rs.76,60,495/- received by the assessee is a capital receipt and, on the facts and in the circumstances of the present case, is not liable to be included in the taxable income under section 56(2)(xi) of the Act. Accordingly, we set aside the order of the Ld. CIT(A) on this issue and direct the Assessing Officer to delete the addition of Rs.76,60,495/-. The grounds raised by the assessee are allowed. 13. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on the 14th day of October, 2026 in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (मनु कुमार िग�र) (S.R.RAGHUNATHA) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER चे�नई/Chennai, +दनांक/Dated: 14th October 2026 Digitally signed SANDEE by SANDEEP SNDP, Sr. PS KUMAR P KUMAR Date: 2026.10.16 11:26:56 +05'30'

ITA No. 3701/Chny/2025 (A Y 2019-20) Ramireddy Sambasiva Reddy Vs ITO NCW-8(1) :: 7 :: आदेश क ��त,ल-प अ.े-षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF