BALASAHEB SHIVRAM KOKANE,AURANGABAD vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, , AURANGABAD

The assessee is aggrieved by not treating the amount received from his employer under early retirement scheme as a ‘Capital receipt’ and hence, not chargeable to tax.

Succinctly, the facts of the case are that the assessee was working with Colgate Palmolive (India) Limited. He filed the return declaring total income of Rs.31,36,810/-, in which relief u/s.89(1) was claimed on account of Voluntary Retirement scheme availed by him. The assessee claimed in the return that the amount received was towards Early Retirement Scheme (ERS) and hence, covered under Rule 21A(1)(a). The assessee also contended before the AO during the course of assessment proceedings that the amount was not at all chargeable to tax as it was in the nature of ‘Capital receipt’. Relevant discussion in this regard has been made on page 8 of the assessment order recording the assessee’s claim of ‘capital receipt’. The AO held that the amount was not a ‘capital receipt’ but a “revenue receipt’ chargeable to tax under section 17 read with rule 21(A)(1)(c). He thus restricted the claim u/s. 89(1) to Rs.2,59,198/- as against Rs.9,75,935/- made by the assessee which led to the addition. The ld. CIT(A) remained unconvinced and upheld the assessment order on this score.

I have heard the rival submissions and gone through the relevant material on record. It is seen that the ld. CIT(A) dismissed the assessee’s claim of the amount having been received as a ‘capital receipt’. The ld. AR has brought to my notice three orders passed by the National Faceless Appeal Centre accepting the amount received as ‘capital receipt’ in the hands of other employees who received the amount on Termination of service under Early Retirement Scheme in similar circumstances. One order passed by the NFAC, Delhi is in the case of Kisan Goroba Kharade dt.

05-09-2022, another one is dated 02-09-2022 in the case of Deepak Shankarbhai Patel and still another dated 01-08-2022 in the case of Kailas Dadaji Pagare. In all these three appeals, the ld. CIT(A) has accepted the claim of ‘capital receipt’ towards the amount received by these hitherto employees of Colgate Palmolive (India) Limited who availed the Early Retirement Scheme benefit similar to the assessee. The ld. AR requested that the matter may be restored to the file of ld. CIT(A) for passing the speaking order in the case of the assessee. No serious objection was taken by the ld. DR. In view of the rival but common submissions, I set-aside the impugned order and remit the matter to the file of the ld. CIT(A) for disposing the appeal on merits after taking into consideration the view canvassed in the above three appeals and further, if any appeals by the Revenue, against such orders have been presented before the Tribunal and the consequential fate of such appeals.

In the result, the appeal is allowed for statistical purposes.