VIJAY SHRINIVASRAO KULKARNI,AURANGABAD vs. INCOME TAX OFFICER, WARD1(1) AURANGABAD, AURANGABAD

आदेश / ORDER

PER INTURI RAMA RAO, AM:

This is an appeal filed by the assessee directed against the order of National Faceless Appeal Centre (NFAC), Delhi, dated 08.09.2023 passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year 2019-20.

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89(1) of the Income Tax Act, 1961 (in short ‘the Act’) in respect of

compensation received for the termination of employment with M/s. Pfizer

Healthcare India Private Limited. Against the said return of income,

assessment was completed by the Assessing Officer (AO) vide order dated

29.09.2021 passed u/s 143(3) r.w.s. 144B of the Act denying the relief of

Rs.13,22,187/- claimed u/s 89(1) of the Act by holding that the appellant had

not received any arrears of salary or salary in advance.

before the CIT(A) seeking relief u/s 89(1), as well as, claiming that the receipt

of compensation from M/s. Pfizer Healthcare India Private Limited towards

termination of services was capital receipt and cannot be taxed within purview

of provisions of section 17(3). The NFAC vide order dated 08.09.2023 has

confirmed the action of the AO in denying the relief u/s 89(1) of the Act as the

assessee had failed to comply with several hearing notices as mentioned in

para 4 of the impugned order.

us in the present appeal. When the matter was called on, the learned counsel

had prayed for remand of the matter to the NFAC, as NFAC had failed to deal

with the matter on merits.

The issue in the present appeal relates to the eligibility of assessee for relief

u/s 89(1) in respect of amount of compensation received for termination of

services, as the employer had closed down the plant following the norms

imposed by World Health Organization. The compensation in question comes

within the provisions of section 17(3). No doubt, the provisions of section 89

provides for relief when the salary was received in advance or paid in arrears

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or compensation was received which comes within the purview of clause (3) of

section 17 of the Act, but the proviso to section 89 of the Act clearly provides

that no relief u/s 89 shall be granted in respect of amount received or

receivable by the assessee on his voluntary retirement or termination of

services in accordance with any scheme or scheme of voluntary retirement.

The relevant provisions of section 89 are extracted as below:

“89 —Where an assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance or is in receipt, in any one financial year, of salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family pension as defined in the Explanation to clause (iia) of section 57, being paid in arrears, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, the Assessing Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed:]

Provided that no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause (i) of clause (10C) of section 10, a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under clause (10C) of section 10 in respect of such, or any other, assessment year.”

The claim made by the assessee u/s 89 of the Act is clearly hit by proviso to

section 89(1) of the Income Tax Act, the assessee is not entitled to relief u/s

89(1). As regards to the additional claim made by the assessee before the

CIT(A) that the compensation in question should be treated as capital receipt,

cannot be accepted as the compensation in question comes within the ambit of

provisions of section 17(3)(iii) of the Act which clearly provides that the

compensation received from the former employer for termination of his services

is taxable as a profit in lieu of salary. The grounds of appeal filed by the

appellant are devoid of any merit. Accordingly, the grounds of appeal filed by

the assessee are dismissed.

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CIT(A) had not been acceded to, in view of the fact that it becomes useless

formality, it only contributes to the docket explosion of this Tribunal. Thus, the appeal filed by the assessee stands dismissed.

Order pronounced in the open court on 12th March, 2024.

Sd/- Sd/- INTURI RAMA RAO S.S. GODARA JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 12th March, 2024 GCVSR/Satish

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order is forwarded to : 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; 3. The concerned Pr.CIT वभागीय �#त#न$ध, आयकर अपील�य अ$धकरण, पुणे “B” / DR ‘B’, 4. ITAT, Pune; 5. गाड) फाईल / Guard file. आदेशानुसार / BY ORDER,

//स�या पत �#त// True Copy// व,र-ठ #नजी स$चव / Sr. Private Secretary आयकर अपील�य अ$धकरण, पुणे / ITAT, Pune