COMMISSIONER OF INCOME-TAX Vs. M. KRISHNAMURTHY

JUDGEMENT

(1.) BY framing the following question of law:

(2.) THE assessee was an employee of the Indian Overseas Bank. During the previous year relevant to the assessment year 2001 -02, the assessee retired from service under the voluntary retirement scheme offered by the said bank. On retirement, the assessee received from the employer bank several dues including ex gratia. The ex gratia had been worked out by the employer at 60 days salary for each completed year of service or salary for the number of months of service left, whichever was less. Out of the ex gratia thus received, the assessee claimed exemption of Rs. 5,00,000 as per the provisions of Section 10(10C) of the Act. The balance ex gratia was admitted as income. However, while working out the tax payable on such income, the assessee claimed relief under Section 89(1) of the Act. The Assessing Officer rejected the claim of the assessee for the relief under Section 89(1) of the Act and passed the assessment order granting exemption under Section 10(10C) of the Act. On appeal, the Commissioner of Income -tax (Appeals) allowed the same in favour of the assessee. The Tribunal, on further appeal at the instance of the Revenue, held in favour of the assessee following the order of this Court in CIT v. G.V. Venugopal reported in : [2005] 273 ITR 307. The correctness of the said order is canvassed before this Court in this appeal.

(3.) THE Tribunal, while dismissing the appeal filed at the instance of the Revenue, followed the Division Bench judgment of this Court in the case of CIT v. G.V. Venugopal reported in : [2005] 273 ITR 307. The facts are identical in that case. The question of law is also identical as that of the present case. The Division Bench has held that the second proviso to Section 10(10C) only refers to exemption claimed in any other year. Every assessment year is a self -contained unit and the mere fact that the relief under Section 89 had been spread over to several years, did not mean that the relief was not in respect of a particular assessment year. There was no prohibition to the twin benefits in respect of an amount received under the voluntary retirement scheme. The relief contemplated under Section 89 (1)is aimed to mitigate the hardship that may be caused on account of the high incidence of tax due to progressive increase in the tax rate. Payment under the voluntary retirement scheme is covered by the word 'salary' which has been given a very wide definition under Section 17. Since the assessee was covered by Section 89, he would get both the benefits. Such decision squarely covers the question of law framed by the Revenue in this case against the Revenue. Hence, the appeal is dismissed.