KARAN PAL SINGH,MOHALI vs. ITO, W-6(2), MOHALI

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)].

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 shortness of the delay period, the delay in filing the appeal is hereby

condoned.

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.

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.

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

issue is these appeals is decided accordingly.

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