SHRI VASUDEO BABAJI CHINDARKAR,MUMBAI vs. ASSTT COMMISSIONER OF INCOME TAX, CIRCLE-34(3), MUMBAI, MUMBAI

Shri Ravikant Pathak appearing on behalf of the assessee submitted that the assessee is a senior citizen and was a salaried employee. The assessee filed his return of income declaring total income of Rs.39,69,140/- for the assessment year 2017-18.. Thereafter, the assessee filed revised return of income declaring income of Rs.47,03,750/-. During the period relevant to the assessment year under appeal, the assessee had received compensation on termination of his employment. The assessee was working with Century Textiles and Industries Ltd. The said company declared Voluntary Retirement Scheme (VRS) as the company had incurred huge losses and wanted to shut down its unit in the year 2008. The assessee was one of the 275 workers who had not opted for VRS declared by the company. The company in terms of the agreement dated 25/11/2016 paid ex-gratia compensation of Rs.47,03,750/-, including TDS of Rs.12,73,200/- in full and final settlement for termination of services to the assessee. The aforesaid amount was duly reflected in Form No.16 issued by the company for the Financial Year 2016-17. In the return of income for assessment year 2017-18, the assessee claimed relief under section 89(1) of the Income Tax Act, 1961 [ in short ‘the Act’]. Along with return of income the assessee had uploaded Form No.10E as mandated under the Act. The Assessing Officer while completing the assessment restricted the claim of assessee to Rs.2,88,888/- as against the claim worked out by the assessee atRs.12,43,217/-. The assessee had made the claim in accordance with Rule - 21A(2) of the Income Tax Rules 1962 [in short ‘the Rules’]. The Assessing Officer computed the claim by applying the provisions of Rule 21A(4). The ld. Authorized Representative of the assessee submitted that in the case of similarly placed employees, the Tribunal held one time lumpsum ex-gratia compensation eligible for relief under section 89 r.w.r. 21A(2). The ld. Authorized Representative of the assessee to strengthen his submissions placed reliance on the following decisions:

(i) Rajesh Shantaram Chavan vs. ACIT, A.Y. 2017-18 decided on 22/04/2022. (ii) Sanjay Laxman Kangude vs. ACIT, ITA No.1860/Mum/2021, A.Y. 2017-18 decided on 22/04/2022. (iii) Suryaji Shriram Patekar vs. ACIT, ITA No.2095/Mum/2021 A.Y. 2017-18 decided on 19/05/2022. 3. Per contra, Smt. Beena Santosh representing the Department vehemently defended the impugned order.

Both sides heard. In so far as the facts are concerned, they are not in dispute. The only point of contention is whether the assessee is eligible for relief u/r.21A(2) or u/r.21A(4) of the Rules. The Tribunal in the case of Shri Rajesh Shantaram Chavan vs. ACIT, in (supra) decided identical dispute in favour of the assessee therein. In the said case, the assessee was also an employee of Century Textiles & Industries Ltd. and had received lumpsum ex-gratia compensation on termination of service. The assessee therein had claimed relief under section 89(1) r.w.r 21A(2). The Assessing Officer / CIT(A) determined relief by applying the provisions of Rule 21A(4). The Tribunal held that the assessee is eligible for relief under section 89(1) of the Act r.w.r. 21A(2). Similar view was taken by the Tribunal in the case of Sanjay Laxman Kangude and Suryaji Shriram Patekar, similarly placed persons receiving one time ex-gratia compensation from Century Textiles & Industries Ltd.

No contrary decision was brought to the notice of Bench by the Revenue. In the facts of the case and in the light of decisions of the Tribunal referred above, the appeal of the assessee is allowed.

In the result, impugned order is set-aside and appeal by the assessee is allowed. Order pronounced in the open Court on Friday the 28th day of October, 2022.