S PARTHASARATHY Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE appeals were filed against the orders of the Income Tax Appellate Tribunal by formulating the following substantial questions of law : "i.Whether, on the facts and in the circumstances of the case, the Tribunal was justified in entertaining the Departmental appeal, which is contrary to Instruction No,2/2005 dated 24.10.2005 issued by the Central Board of Direct Taxes wherein the Department is precluded from filing an appeal if the tax effect involved in the appeal is less than Rs.2 lakhs and ii.Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the appellant was not entitled to exemption under Section 10(10C) of the Income Tax Act, 1961 in respect of the amount received under the Early Retirement Option of the ICICI Bank ?"

(2.) IN all these appeals, as the facts are one and the same and the questions of law are identical as to the applicability of the circular of the Central Board of Direct Taxes dated 24.10.2005, the facts relating to TC(A)No.1210 of 2009 arising out of ITA.No,2283/Mds/2007 in respect of the assessment year 2004-2005 are stated hereunder : The assessee is an individual and was employed in ICICI Bank. He took voluntary retirement under the Early Retirement Option (hereinafter referred to as the ERO) floated by the ICICI Bank. The ERO cash compensation of Rs.16,96,780/- was received by the assessee. For the assessment year 2004-2005, the assessee filed his return of income on 16.6.2004 declaring a total income of Rs.2,27,710/- and claimed a refund of Rs.2,60,470/-. The assessee claimed exemption under Section 10(10C) of the Act to the extent of Rs.5 lakhs out of the compensation received under the said scheme. Subsequently, the assessee filed a revised return on 22.12.2004 admitting an income of Rs.11,96,780/-, which was processed under Section 143(1) of the Act and a refund of Rs.1,90,755/- was granted. Later on, the case was taken up for scrutiny by issuance of a notice under Section 143(2) of the Act and in the assessment under Section 143(3) of the Act, the Assessing Officer took the view that the ERO scheme of the ICICI Bank did not fulfill the conditions enumerated in Sub.Clauses (iii) and (iv) of Rule 2BA of the INcome Tax Rules (hereinafter referred to as the Rules) and that the exemption under Section 10(10C) of the Act cannot at all be allowed. The scrutiny assessment was completed on 26.12.2006 denying exemption of Rs.5 lakhs under Section 10(10C) of the Act and the total income was determined at Rs.16,96,780/-.

(3.) IT is of-course true that this Court, in TC.Nos.1458 to 1461 of 2007 dated 12.3.2008, to which one of us (K.Raviraja Pandian,J) is a party, considered the said scheme framed by the ICICI Bank and found that the said scheme is not coming under the purview of Sub.Clauses (iii) and (iv) of Rule 2BA of the Rules and that the claim of the person, who retired voluntarily under the said scheme for deduction under Section 10(10C) of the Act, is not available having regard to the terms of the scheme. Notwithstanding coming to the conclusion as above on merits in several cases where the tax effect is less than the one prescribed under Instruction No,2/2005 of the Central Board of Direct Taxes dated 24.10.2005, without going into the merits of the case, this Court allowed the appeals on the sole ground that the tax effect is less than the one prescribed in the circular of the Central Board of Direct Taxes for filing an appeal.