COMMISSIONER OF INCOME-TAX Vs. M. AROKIAM

JUDGEMENT

(1.) THESE appeals are at the instance of the Revenue against the order of the Income -tax Appellate Tribunal, Madras 'B' Bench, Chennai, dated September 21,2007, passed in I.T.A. Nos.1320 and 1323/Mds/2007 respectively.

(2.) THE relevant assessment year is 2004 -05. The facts, as culled out from the statement of facts, are as follows: The assessees were employees of the Reserve Bank of India, Chennai, retired voluntarily under the Optional Early Retirement Scheme. They claimed exemption under Section 10(10C) of the Income -tax Act for Rs. 5 lakhs each out of the compensation received under the above scheme. The Assessing Officer found that the Reserve Bank of India has not granted exemption under Section 10(10C) on the compensation received under the above scheme, but has deducted tax duly treating the compensation as fully taxable and remitted to the Government account. The assessees made a claim under Section 10(10C) independently in the computation statement attached to the return and claimed refund. The Assessing Officer after considering the scheme concluded that the scheme was not in accordance with Rule 2BA of the Income -tax Rules and disallowed the claims. As against the orders, the assessees preferred appeals before the Commissioner of Income -tax (Appeals), who sustained the orders of the Assessing Officer. The assessee has further taken the matter on appeal to the Income -tax Appellate Tribunal and the Tribunal allowed the appeals. The correctness of the same is put in issue before this Court in these appeals by formulating the following common questions of law:

(3.) IN the above referred judgment, the Revenue assailed the order of the Tribunal granting the relief of deduction under Section 10(10C) of the Income -tax Act, 1961, to the respective assessees, who have severed their service connection from their employers - -the ICICI Bank and the Reserve Bank of India, under a scheme framed in the year 2003 called the ICICI Bank Early Retirement Option 2003 and the Optional Early Retirement Scheme (OERS) 2003, respectively., wherein after extracting the need for introduction of the scheme and the object for introduction of the Optional Early Retirement Scheme in the Reserve Bank of India, as set out in its Administration Circular No. 1, dated August 11, 2003, held thus: