COMMISSIONER OF INCOME TAX Vs. P MADHAVAN

JUDGEMENT

(1.) THE above Tax Case Appeal is filed by the Revenue against the order of the Income Tax Appellate Tribunal, "C" Bench, Chennai, dated 21st April, 2006 passed in I.T.A.No.1258/Mds/2004 by raising the following Question of Law. "Whether the amount paid to employees under the Voluntary Retirement Scheme is entitled for deduction ? "

(2.) THE assessee was an employee of the State Bank of India. THE relevant assessment year is 2001-2002 and the corresponding accounting year ended on 31.3.2001. THE assessee has filed a return of income on 16.7.2001 claiming exemption under Section 10(10C) and also relief under Section 89(1) of the Income Tax Act (in short "the Act"). During the relevant assessment year, 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 said 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 lakhs as per the provisions of Section 10(10C) of the Act and the balance ex-gratia was admitted as income. However, while computing the tax payable, the assessee claimed relief under Section 89(1) of the Act. THE Assessing Officer rejected the claim for the relief under Section 89(1) of the Act. Aggrieved by that order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) and the Commissioner of Income Tax (Appeals) allowed the appeal. Aggrieved by that order, the Revenue filed an appeal before the Income Tax Appellate Tribunal. THE Tribunal dismissed the revenue appeal and confirmed the order of the CIT(A). Aggrieved by that order, the Revenue preferred the present appeal.