Loading judgment…
No AI summary yet for this case.
आदेश/Order
Per Sanjay Garg, Judicial Member:
The present appeals has been preferred by the different assessees
against the respective orders of the Commissioner of Income Tax
(Appeals)-2, Chandigarh [hereinafter referred to as CIT(A)].
Since common issue is involved in all the appeals, hence, these
were heard together and are being disposed of by this common order for
the sake of convenience. ITA No.870/Chd/2018 in the case of ‘Rajeshwar
Sharma’ is taken as lead case for narration of facts.
ITA No.870/Chd/2018
The appeal is barred by a limitation period of 3 days. Considering
the shortness of the delay period, the delay in filing the appeal is hereby
condoned.
The assessee has taken following grounds of appeal:-
Under the facts and circumstances of the case and in law, the Ld. CIT(A) Chandigarh has erred in upholding the additions made by the Ld. Assessing officer and disregarding the provisions of sub-section (ii) of section 10(10A) ignoring the fact that the amount of Rs. 28,08,847/- received by the assessee was commuted pension on account of retirement benefit.
That the Ld. CIT(A) is wrong in upholding the addition amounting to Rs. 2,00,000/- in respect of cash deposits as the same as were made out of cash withdrawals done by the assessee in the previous years.
The Ld. Counsel for the assessee has submitted that as per the
ITA Nos. 870 to 872/Chd/2018- Sh. Rajeshwar Sharma & Ors, Mohali 3
instruction of the client, he does not press Ground no.2 of the appeal. A
separate note that this ground is not pressed is also made by the counsel
for the assessee under his signatures. In view of this, Ground No.2 is
dismissed as not pressed.
Now coming to the Ground No.1 of the appeal. The brief facts 6.
relating to the issued are that during the assessment proceedings, the
Assessing officer noted that the assessee had claimed exemption u/s 10
(10A) of the Income-tax Act, 1961 (in short 'the Act') amounting to Rs.
14,00,236/- (50% of 28,00,741/-), received as lump sum payment from its
erstwhile employer i.e. M/s Ranbaxy Laboratories Ltd on account of
discontinuance of certain retirement policy of company. The amount was
claimed by the assessee to be amount received on account of retirement
benefits by his employer company M/s Ranbaxy Laborites Ltd./, as per
company’s policy and was thus in the nature of commuted pension and
therefore, eligible for exemption u/s 10(10A) of the Act. In para 6.1, the
Assessing officer observed that section 10(10A) relates to members of the
civil services, defence or to the members of all India service or to the
members of the civil services of a State or holder of civil posts under a
state or to the employees of a local authority or a corporation established
by a Central, State or provincial Act and not the employees of the private
companies. However, the Assessing officer also further examined the
claim of exemption and finally disallowed the same for different reasons.
In appeal, so far as the observation of the Assessing officer that the
benefit of section 10(10-A) of the Act was not available to the assessee,
the Ld. CIT(A) held that as per the provisions of section 10(10A)(ii) of the
ITA Nos. 870 to 872/Chd/2018- Sh. Rajeshwar Sharma & Ors, Mohali 4
Act, the exemption was also available to the private employees also.
However, the Ld. CIT(A) confirmed the disallowance made by the
Assessing officer observing that the aforesaid payment was made by the
employer of the assessee employees as one time lump sum payment on
account of closure of pension policy. That while calculating the amount
payable to employees on retrenchment, various factors were considered
including the salary, length of service completed, number of years
remaining till retirement etc. of the employees. He held that the amount
had not been paid under the scheme of commutation of pension rather the
same was paid on account of retrial policy being unilaterally withdrawn by
the employer and that the amount is not a commutation of pension. He also
observed that even in the retirement policy, there was no provision
regarding any commutation of pension. He, therefore, held that the
assessee was not eligible for exemption as enumerated in section 10(10A)
of the Act and denied the exemption claimed by the assessee on this
account.
We have considered the rival submissions and have also gone through
the record. Though in strict terms, it may not be said that the amount
received by the assessee was on account of commutation of pension,
however, the fact on the file is that the aforesaid amount was given by the
new employer who has taken over the company from the earlier employer
and he had terminated the services of the employees on account of job
retrenchment. The amount was paid as a compensation for retrenchment of
services taking into consideration the length of service, basic salary, the
age and other factors. In our view, the said amount is a compensation paid
by the employer while terminating the services of the employee on account
ITA Nos. 870 to 872/Chd/2018- Sh. Rajeshwar Sharma & Ors, Mohali 5
loss of job and further subsistence, thus, the said amount was just a capital receipt in the hands of the assessee. In fact, no part of amount received by the assessee is taxable. We, therefore, allow the appeal of the assessee and delete the disallowance and consequent additions made by the Assessing
officer in this respect. We further hold that the assessee is entitled to claim refund / adjustment of the tax paid in respect of the aforesaid compensation received, if so, claimed by the assessee. In the above terms, the appeal of the assessee stands partly allowed.
ITA No. 871 & 872/Chd/2018
Since the facts and issue involved in all the appeals are identical, the
issue is these appeals is decided accordingly.
In view of this, the appeal of the assessee for assessment in ITA No. 870/Chd/2018 stands partly allowed, whereas, appeals of the assessees in ITA Nos. 871 & 871/Chd/2018 are allowed.
Order pronounced in the Open Court on 11.03.2019
Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member
Dated : 11.03.2019 “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
ITA Nos. 870 to 872/Chd/2018- Sh. Rajeshwar Sharma & Ors, Mohali 6