Rajeshwar Sharma Vs ITO (ITAT Chandigarh)
The appeals before the ITAT Chandigarh were filed by different assessees against orders of the Commissioner of Income Tax (Appeals). Since a common issue was involved, the appeals were heard together, with the case of Rajeshwar Sharma treated as the lead case. One of the grounds relating to cash deposits was not pressed by the assessee and was accordingly dismissed.
The principal issue concerned exemption claimed under Section 10(10A) of the Income Tax Act in respect of a lump-sum amount received from the assessee’s erstwhile employer, Ranbaxy Laboratories Ltd. The assessee claimed that the payment represented retirement benefits in the nature of commuted pension and was therefore eligible for exemption under Section 10(10A). The Assessing Officer disallowed the claim, observing that the payment did not qualify for exemption and treating it as taxable.
In appeal, the CIT(A) accepted that Section 10(10A)(ii) could apply even to private-sector employees. However, the CIT(A) held that the payment was not made under any scheme for commutation of pension. According to the CIT(A), the amount was paid as a one-time lump sum following the employer’s decision to discontinue a retirement policy. Since there was no provision for commutation of pension under the policy, the exemption claim was rejected.
