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

आदेश / ORDER

PER INTURI RAMA RAO, AM:

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 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.

6. The request of the learned counsel for remand of the matter to the file of 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.