Shri Joshi Balkrishna S. Satara, v. ITO Ward 3, Satara,

ITA 1240/PUN/2004 | 2001-2002
Pronouncement Date: 29-10-2010 | Result: Allowed

Appeal Details

RSA Number 124024514 RSA 2004
Bench Pune
Appeal Number ITA 1240/PUN/2004
Duration Of Justice 6 year(s) 3 month(s) 8 day(s)
Appellant Shri Joshi Balkrishna S. Satara,
Respondent ITO Ward 3, Satara,
Appeal Type Income Tax Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 08-11-2010
Assessment Year 2001-2002
Appeal Filed On 21-07-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B PUNE BEFORE SHRI I.C. SUDHIR JM AND SHRI G.S. PANNU AM SR.NO. ITA NO. A.Y. APPELLANT RESPONDENT 1. 1240/PN/04 2001-02 SHRI JOSHI BALKRISHNA S ITO WARD 3 SATARA 2. 1277/PN/04 -DO- SHRI WAGHMARE S.S. -DO- 3. 1278/PN/04 -DO- SHRI SHEDAGE SHAMRAO M -DO- 4. 1279/PN/04 -DO- SHRI PATIL BAPU PARSU -DO- 5. 1280/PN/04 -DO- SHRI SHINDE CHANDRAKANT P. -DO- 6. 1281/PN/04 -DO- SHRI KAKADE KAKA M. -DO- 7. 1282/PN/06 -DO- SHRI SADAMATE CHANDAR S. -DO- 8. 1283/PN/04 -DO- SHRI DABHADE SHAMRAO M. -DO- APPELLANTS BY : SHRI M.K. KULKARNI RESPONDENT BY: SHRI ABHAY DAMLE ORDER PER G.S. PANNU AM THIS IS THE SECOND ROUND OF LITIGATION. EARLIER TH ESE APPEALS WERE DISPOSED OFF VIDE CONSOLIDATED ORDER O F THE TRIBUNAL DATED 20-4-2006 IN ITA NO. 1232/PN/2004 ET C. IN THE CASE OF SHRI JOSHI VASANT LAXMAN AND OTHERS. H OWEVER IN VIEW OF JURISDICTIONAL HIGH COURT JUDGMENT IN THE C ASE OF CIT VS. KOODATHIL KALLYATAN AMBUJAKSHAN (2008) 219 CTR (BOM) 80 ALL THESE APPEALS WERE RECALLED VIDE ORDER OF TH E TRIBUNAL DATED 8-10-2010 IN M.A. NO. 147/PN/2006 ETC. IN THE CASE OF SHRI PAWANE DADA BIRU AND OTHERS FOR DECIDING THE I SSUE AFRESH. ITA NO. 1286.04 ETC. SUBHASH GAJARE AND OTHERS A.Y. 2001-02 2 2. ALL THESE APPEALS ARISE OUT OF IDENTICAL ORDERS OF CIT(A) II PUNE FOR A.Y. 2001-02 ON THE COMMON ISSUE OF EXEMPT ION UNDER CLAUSE (10C) OF SECTION 10 I.E. TAXABILITY OF BENEFIT RECEIVED UNDER VRS. . SO THEY WERE HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE. 3. WE FIND THAT THE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. KOODATHIL KALLYATAN AMBUJAKSHAN (2009) 309 ITR 113 WHEREIN THE AMOUNT RECEIVED UNDER OPTIONAL EARLY RE TIREMENT SCHEME (OERS) WHICH IS FLOATED BY RBI WAS HELD TO BE APPLICABLE TO ALL THE EMPLOYEES WHO HAVE SERVED FOR 25 YEARS AND HAD ATTAINED THE AGE OF 50 YEARS. IT WAS AIMED AT REDUCTION IN THE EXISTING STRENGTH OF EMPLOYEES AND VACANCIES CAUSED WERE NOT FILLED UP. THE QUESTION OF EMPLOYIN G RETIRED EMPLOYEES WITH ANOTHER CONCERN OF SAME MANAGEMENT D ID NOT ARISE AS RBI HAD NONE. IN THIS BACKGROUND HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: FIRSTLY THE OERS SATISFIES THE FIRST TEST OF R. 2BA NAMELY 10 YEARS OF SERVICE AND 40 YEARS OF AGE. IN THE INSTANT CASE IT IS 25 YEARS OF SERVICE AND 50 YEARS OF AGE. SECONDLY IT APPLIES TO ALL EMPLOYEES. THIS MEE TS THE SECOND REQUIREMENT. THE THIRD REQUIREMENT IS TH AT THE SCHEME HAS BEEN DRAWN TO RESULT IN OVERALL REDUCTION IN THE EXISTING STRENGTH OF THE EMPLOYEES . THIS HAS NOT BEEN EXPRESSLY STATED IN THE SCHEME. HOWEVER THE OBJECT BEHIND SEC.10(10C) AND THE NOTE PUT UP BEFORE THE GOVERNOR AT THE TIME WHEN THE SCHEME WAS FRAMED HAS TO NOTED. THE MATERIAL ON RECORD WOULD INDICATE THAT THE EMPLOYEES HAD BEEN RENDERED SURPLUS ON ACCOUNT OF VARIOUS STEPS TAKEN BY THE EMPLOYER. THE SCHEME THEREFORE WAS MEANT FOR AN OVERALL REDUCTION IN THE EXISTING STRENGTH O F THE EMPLOYEES. THE THIRD REQUIREMENT IS ALSO THEREFORE SATISFIED. THE FOURTH REQUIREMENT WAS THE VACANCY CAUSED BY THE VOLUNTARY RETIREMENT OR VOLUNTARY SEPARATION IS NOT TO BE FILLED UP. A FINDING OF FAC T HAS BEEN RECORDED BY THE TRIBUNAL ON THAT COUNT WHICH I S ITA NO. 1286.04 ETC. SUBHASH GAJARE AND OTHERS A.Y. 2001-02 3 NOT CHALLENGED IN TERMS OF THE QUESTIONS OF LAW AS FRAMED BY THE REVENUE. SECONDLY THERE WAS MATERIAL ON RECORD WHICH SHOWS THAT THE SCHEME BASICALLY WAS TO REDUCE THE EMPLOYEE STRENGTH AS POSTS HAD BECOME SURPLUS ON ACCOUNT OF REORGANIZATION. ONE CANNOT FI LL IN THE POSTS WHICH HAVE BECOME SURPLUS AS THE POSTS HAVE BECOME REDUNDANT. ALSO ADDITIONAL EVIDENCE TAKEN ON RECORD UNDER SEC. 260A(7) WOULD SHOW THAT NONE OF THESE POSTS FROM THE DAY THE SCHEME CAME INTO FORCE TILL 2008 HAVE BEEN FILLED IN. IN OTHER WORDS THE FOURTH REQUIREMENT HAS ALSO BEEN SATISFIED. INS OFAR AS THE FIFTH REQUIREMENT IS CONCERNED THE TRIBUNAL HAS ALREADY ANSWERED THE ISSUE AND THAT FINDING OF FACT IS NOT IN ISSUE. EVEN OTHERWISE CONSIDERING TH AT THE RBI IS A STATUTORY BODY CREATED UNDER AN ACT TH ERE IS NO OTHER COMPANY OR CONCERN BELONGING TO THE SAM E MANAGEMENT. THE FIFTH REQUIREMENT HAS ALSO BEEN SATISFIED. THE SIXTH REQUIREMENT HAS ALSO BEEN SATISFIED AS IN THE INSTANT CASE WHAT IS OFFERED IS TWO MONTHS SALARY FOR EACH COMPLETED YEAR OF SERVICE. THUS THE SCHEME EXPRESSLY OR IMPLIEDLY SATISFIED AL L THE REQUIREMENTS OF THE SECTION AS WELL AS THE GUIDELINES FRAMED FOR THE PURPOSE OF S. 10(10C) NAMELY R. 2BA. THE CBDT CIRCULAR DT. 26TH SEPT. OCT. 2005 TOOK NOTE OF THE LETTER WRITTEN BY THE R BI. THAT LETTER BY ITSELF WOULD NOT BE OF MUCH CONSEQUENCES AS THE OERS ITSELF NOTES THAT INCOME- TAX IF ANY WOULD BE PAYABLE BY THE EMPLOYEE. EVEN I N THE NOTE PUT UP BY THE DEPARTMENT FOR INTRODUCTION OF THE SCHEME FOR CONSIDERATION OF THE GOVERNOR IT WAS MADE CLEAR THAT IF ANY INCOME-TAX IS PAYABLE THAT W ILL BE PAID BY THE EMPLOYEE AND IT WAS FURTHER MADE CLE AR THAT THE PAYMENT IS SUBJECT TO PROVISIONS OF S. 10(10C). THE LETTER THEREFORE BY RBI BY ITSELF WO ULD NOT BE DETERMINATIVE AS TO WHETHER THE INCOME IS LIABLE TO TAX. ONE HAS TO SEE THE SCHEME FRAMED IN TERMS OF S. 10(10C) AND WHETHER IT SATISFIES THE GUIDELINES IN TERMS OF R. 2BA. THE COURT IS NOT PRECLUDED TO CONSIDER THE ISSUE IRRESPECTIVE OF THE CBDT CIRCULAR. ON EXAMINATION OF THE ISSUE IT WOULD BE CLEAR THAT THE GUIDELINES HAVE TO BE READ IN CONFORMITY WITH THE STATUTORY PROVISIONS. ON THE F ACTS IN THE INSTANT CASE THE TRIBUNAL HAS RECORDED A FINDING THAT THE PREDICATES OF THE RULE HAVE BEEN SATISFIED. ON A PROPER CONSTRUCTION OF THE RULES TH AT THE SCHEME ITSELF MAY NOT EXPRESSLY STATE ALL THE T ERMS AS IT IS POSSIBLE FOR THE COURT TO READ THE IMPLIED TERMS OF THE SCHEME. IN THE INSTANT CASE THEY HAVE BEEN SO READ.-CIT VS. HERO CYCLES (P) LTD. (1997) 1 42 CTR (SC) 122 : (1997) 228 ITR 463 (SC) UCO BANK VS. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC) CST VS. INDRA INDUSTRIES (2001) 168 CTR (SC) 50: (2001) 248 ITR 338 (SC) AND CIT VS. GWALIOR ITA NO. 1286.04 ETC. SUBHASH GAJARE AND OTHERS A.Y. 2001-02 4 RAYON SILK MILL MFG. CO. LTD. (1992) 104 CTR (SC) 243 4. THE LEARNED AR FOR THE ASSESSEE HAS SUBMITTED TH AT THE FACTS IN THE CASE OF KOODATHIL KALLYATAN AMBUJAKSHA N (SUPRA) ARE EXACTLY SIMILAR TO THE FACTS OF THE PRESENT CAS ES WITH AN EXCEPTION THAT THE SAME IS WITH REGARD TO RBI EMPLO YEES. THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 5. SINCE HONBLE BOMBAY HIGH COURT HAS EXAMINED THE VOLUNTARY RETIREMENT SCHEME IN DETAIL AND GAVE THE JUDGMENT ON A PROPER CONSTRUCTION OF THE RULES STATING THAT THE SCHEME ITSELF HAS NOT EXPRESSLY STATED ALL THE TERMS AND I T IS POSSIBLE FOR THE COURT TO READ THE IMPLIED TERMS OF THE SCHE ME. THIS JUDGMENT OF THE HONBLE BOMBAY HIGH COURT WAS ALSO APPROVED BY THE HONBLE SUPREME COURT IN THE CASE O F CHANDRA RANGANATHAN AND OTHERS VS. CIT (2010) 326 I TR 49 (SC). SIMILAR WAY WE ARE OF THE OPINION THAT THE VOLUNTARY RETIREMENT SCHEME OF THE COMPANY M/S KIRLOSKAR COPE LAND LTD. AVAILED BY THE ABOVE ASSESSEES HAS TO BE READ KEEPING IN MIND THE PRINCIPLES ESTABLISHED BY THE HONBLE BOMB AY HIGH COURT. IN THE INTEREST OF JUSTICE WE ARE OF THE O PINION THAT THIS MATTER CAN BE RESTORED TO THE FILE OF THE A.O TO EX AMINE THE OPTIONAL EARLY RETIREMENT SCHEME OF THE COMPANY AND WHETHER ALL THE CONDITIONS HAVE BEEN SATISFIED AS P RESCRIBED IN RULE 2BA. FOR THIS PURPOSE WE RESTORE THE APPEALS BACK TO THE FILE OF THE A.O FOR THE PURPOSES OF EXAMINING T HE SCHEME AND ALLOWING EXEMPTION UNDER CLAUSE (10C) OF SECTIO N 10 AS ITA NO. 1286.04 ETC. SUBHASH GAJARE AND OTHERS A.Y. 2001-02 5 PER FACTS AND LAW AVAILABLE AT THE RELEVANT POINT O F TIME AFTER PROVIDING DUE OPPORTUNITY OF HEARING. SINCE WE ARE RESTORING THE ISSUE FOR THE ABOVE STATED REASONS WE REFRAIN FROM COMMENTING ON THE MERITS OF THE ISSUE AT OUR HAND. 6. IN THE RESULT ALL THE APPEALS ARE ALLOWED FOR S TATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT AT THE CONCL USION OF THE HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 29-10- 2010. SD/- SD/- (I.C. SUDHIR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 8 TH NOVEMBER 2010 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT (A) -II PUNE (4) CIT PUNE (5) THE D.R. ITAT 'B' PUNE BENCH PUNE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE