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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Sanjay Arora & Shri Manomohan Das
O R D E R
Per Sanjay Arora, AM
This is an Appeal arising out of the Order dated 10.11.2022 by the Commissioner of Income Tax (Appeals), Income Tax Department [CIT(A)], dismissing the assessee’s appeal contesting her assessment under section 147 r.w.s. 143(3) of the Income Tax Act, 1961 (the Act) dated 17.09.2014 for Assessment Year (AY) 2007-08. The same was heard along with the Stay Application in its respect.
The sole issue arising in the instant appeal is the validity or otherwise in law of the assessee’s claim for exemption under section 10(10C) of the Act, claimed at Rs.5,00,000, the prescribed limit, qua a sum of Rs.10,00,000 received by her during the relevant previous year on availing Exit Option Scheme (EOS) by her employer, i.e., State Bank of Travancore. The same stands dismissed by the Revenue on the ITANo. 996/Coch/ 2022 (AY 2007-08) SA No. 89/Coch/2022 Nelliparambil Gopalan Gangadevi ground that the said scheme does not conform to Rule 2BA, as mandated by section 10(10C), toward which we may produce the relevant part thereof: - Incomes not included in total income.
In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included— (1) --------------------- -------------------------- (10BC) --------------- (10C) any amount received or receivable by an employee of— (i) a public sector company; or (ii) ……(viii) Provided that the schemes of the said companies or authorities or societies or Universities or the Institutes referred to in sub-clauses (vii) and (viii), as the case may be, governing the payment of such amount are framed in accordance with such guidelines (including inter alia criteria of economic viability) as may be prescribed.”
We have heard the parties, and perused the material on record. 3.1 We are afraid, we are unable to comprehend the assessee’s case. This is as the eligibility of EOS for the purpose of section 10(10C) is to be tested on the anvil of r. 2BA of the Income Tax Rules, 1962. The matter, given so, becomes essentially factual, i.e., whether the scheme under which the income has been received satisfies the prescription of r. 2BA, so that all the conditions thereof are to be satisfied. The Revenue authorities have issued definite findings in the matter. No infirmity therein, save one, has been pointed out before us. The burden to prove her return, and the claims preferred thereby, is clearly on the assessee.
3.2 We may, nevertheless, dilate further. The ld. CIT(A) has tabulated each of the conditions of r.2BA, contrasting them with the corresponding status of EOS, at para 8.1 (pgs. 16-18) of his order. He has in fact taken pains to address each of the objections raised by the assessee before him including the case law relied upon, concluding as under: Page 2
ITANo. 996/Coch/ 2022 (AY 2007-08) SA No. 89/Coch/2022 Nelliparambil Gopalan Gangadevi “8.5 In view of the above discussion made in para nos. 8 to 8.4 above, it is held that the appellant is not eligible for claim of exemption u/s 10(10C) of the Act as the EOS formulated by the employer of the appellant i.e. State Bank of Travancore is not in conformity with the provision of section 10(10C) r.w. Rule 2BA, and accordingly the order of the AO is upheld. Accordingly, the ground No. 2 is dismissed.” (pg. 25-26) Continuing further, in all the decisions relied upon by the assessee, the Hon'ble Courts have endorsed the assessee’s claim on a specific finding of the scheme complying with the conditions of r. 2BA, emphasizing, once again, that what is required is the conformity of the scheme with the relevant rule, primacy of which stands also underlined per the Board Circular No. 640 dated 26.11.1992 (reported at [1993] 199 ITR (St.) 2). The Circular is instructive, clarifying several related aspects. Attention is particularly drawn to answers to Qs. 1 & 2, being in respect of the issue at hand. The ld. CIT(A) has further placed reliance on the decision by the Tribunal in State Bank of Mysore vs. CIT (reported at 139 ITD 526 (Bang)), since upheld by the Hon'ble Karnataka High Court [in [2013] 356 ITR 468 (Kar)], as well as by the Cochin Bench in Krishnan Achary vs. ITO (ITA No. 432/Coch/2018, dated 26.02.2020), wherein exemption has been held as rightly denied in view of the non- satisfaction of the conditions of r. 2BA. In the instant case, none of the conditions, save condition # 1, i.e., regarding age and years of services, is satisfied by the assessee, and to that extent the impugned order would stand modified. In fact, the ld. CIT(A), we find has omitted condition 3 of r. 2BA (in the tabular chart), to which we were taken through during hearing, and which states that the vacancy against the voluntary retirement or voluntary separation is not to be filled up. The same is not satisfied inasmuch as we find no reference or no stipulation in the EOS (PB pgs. 127 to 130). The assessee has in support produced a certificate from her employer, which stands also considered by the Revenue authorities. The same only states that the EOS implemented by State Bank of Travancore is on the same lines as implemented by State Bank of India and other associate banks. Nothing more and nothing less. A ITANo. 996/Coch/ 2022 (AY 2007-08) SA No. 89/Coch/2022 Nelliparambil Gopalan Gangadevi perusal of the scheme on record (PB pgs. 100-110) put pays the assessee’s case. Clauses 10 and 12 (viii) thereof, reproduced here-in-below, make it abundantly clear that the exit option scheme under reference is not section 10(10C) compliant: “10. INCOME TAX-TDS As the proposed scheme does not comply with Rule 10(10C) of Income Tax Act 1961 and no benefit of exemption of ex-gratia from income tax is intended in this scheme, there is no legal requirement for obtaining prior approval of Income Tax Department.
GENERAL CONDITIONS (i) …. (vii) viii) The Exit Option Scheme shall be a distinct scheme and it shall not be construed as a revision of the SBI VRS introduced in 2000-2001, and as such no claim from any officer who have retired/will be retiring under any other existing or past scheme(s) shall be entertained.” (emphasis, ours) 4. In view of the foregoing, we find no merit in assessee’s case. Since we have heard and decided the appeal, the stay application becomes infructuous