SHRI ANIL SURI,CHANDIGARH vs. DCIT, C-1(1), CHANDIGARH

आदेश/Order

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 13.12.2018 of the Commissioner of Income Tax (Appeals)- 1, Chandigarh [hereinafter referred to as ‘CIT(A)’]

ITA No. 127-Chd/2019- Shri Anil Suri, Chandigarh 2 2. That the Ld. CIT(A)-1, Chandigarh erred in facts and in law in making disallowance of claim made by assessee u/s 10(10A)(ii) of the Act of Rs. 15,65,410/- without an / base and reason thereof.

has agitated the action of the lower authorities in making / upholding

the disallowance of claim made by the assessee u/s 10(10A)(ii) of

the Income Tax Act, 1961 (in short 'the Act') of Rs. 15,65,410/-.

of assessment proceedings, the Assessing Officer noticed that the

assessee had revised his return of income and thereby offered less

income than that was shown in the original return. On being asked

to explain in this respect, the assessee explained as under:-

“Reply dated 24.10.2016

The perusal of the above comparative chart reveals that there is fall in income in the revised return of income to the tune of Rs. 15,65,416/- under the head income from salaries. The reason for the fall is that, during the F.Y. 2013-14 relevant of the A.Y. 2014-15, the assessee had received a sum of Rs. 46,96,247/- by way of commuted value of pension as one time settlement from his employer M/s Ranbaxy

ITA No. 127-Chd/2019- Shri Anil Suri, Chandigarh 3 Laboratories Ltd.. the details of which is given in form No. 16 issued by the company. As per section 10(0A) of the Income Tax Act. 1961, 1/3" of such computed value of pension is exempt in the hands of the employee, which in the case of the assessee comes to Rs. 15,65,416/-. The assessee had not taken the benefit of section 10(10A) in the original return of income. As such revised return of income was filed and the benefit of the same section was availed by the assessee. The assessed during the F.Y. 2013-14 had exercised the option of withdrawing the retiral benefits / privileges as one time settlement after putting in the requisite years of service required as per the personnel policy of the employer M/s Ranbaxy Laboratories Ltd. Copies of personnel policy alonqwith offer letter and form No 16 are attached herewith.'

However, the Assessing Officer observed from the record that during

the year under consideration, employer of the assessee had

introduced new retrial policy i.e. Personnel Policy No.32D

superseding the existing Personnel Policy No.32A, 32B and 32C. The

Assessing Officer further observed that as per the earlier policies, the

employee and his / her family (in case of employee who died whilst in

service) would be eligible for pension, gratuity, medical and other

benefits like accommodation and education for children. The new

policy , however, took away all the benefits except the gratuity benefits

which they used to enjoy when policies 32A, 32B and 32C were in

existence In lieu of the same, the assessee was paid a sum of Rs.

46,96,247/- as one time settlement vide letter dated 20"' March 2013.

The assessee treated this amount as commuted pension and 1/3 of the

same was claimed as exempt u/s 10(10A)(ii) of the Income Tax Act,

ITA No. 127-Chd/2019- Shri Anil Suri, Chandigarh 4 1961. The Assessing Officer observed that the assessee continued to

work with Ranbaxy Laboratories Ltd., as was evident from the ITR of

the assessee for the next Assessment Year i.e. A.Y. 2014-15, showing

that the assessee had drawn salary from the said company. He,

therefore, held that the very basic condition for treating any sum as

pension was that employer-employee relation should come to an end,

whereas, in this case, this condition was not fulfilled as the assessee

continued to work with the employer from whom he had received money

as one time settlement. He, accordingly disallowed the claim of the assessee of exemption of 1/3 rd of aforesaid compensation amount

claimed by the assessee as commuted pension u/s 10(10A)(ii) of the

Act.

Assessing Officer. The assessee, thus, has come in appeal before us.

compensation received by the assessee from his employer. The

undisputed facts are that the employer introduced new policy for

payment of pension / commuted pension to the employees. As per the

said policy, the employer of the assessee had drawn annuity policy

for its employees from Life Insurance Corporation of India. Out of

the total fund value payable to the assessee, an amount of Rs.

46,96,247/- was paid to the assessee on account of Commuted

ITA No. 127-Chd/2019- Shri Anil Suri, Chandigarh 5 Pension and the balance funds was to be utilized for paying monthly

pension after getting relieved from service. Though, the assessee

was not immediately retired from the service and continued with the

employment with his employer, yet, the basic intent and purpose of

the aforesaid payment to the assessee was that of payment towards

commuted pension to the employees. Though, generally the retrial

benefits are paid on retirement from service, however, under certain

circumstances, employment may be continued subject to payment of

retrial benefits.

After perusal of the facts of the case, we are of the view, that

the aforesaid payment to the assessee was nothing but the payment of

retiral benefits towards Commuted Pension. We, therefore, are of the

view that the lower authorities were not justified in disallowing the

claim of the assessee u/s 10(10A)(ii) of the Act. The action of the

lower authorities on this account is set aside and the Assessing

Officer is directed to allow the claim of the assessee made u/s

10(10A)(ii) of the Act.

The appeal of the assessee stands allowed.

Order pronounced in the Open Court on 30.10.2019.

Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 30.10.2019

ITA No. 127-Chd/2019- Shri Anil Suri, Chandigarh 6 “आर.के.”

आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar