Ram Dattatray Kaldate Vs ITO (ITAT Pune)
The Pune Bench of the Income Tax Appellate Tribunal considered an appeal filed by an individual, a former employee of Pfizer Healthcare India Pvt. Ltd., against the order of the Commissioner of Income Tax (Appeals)/NFAC for Assessment Year 2019-20. The assessee had filed his return declaring income of ₹60,34,360 and claimed relief under Section 89 of the Income-tax Act on amounts received pursuant to the Pfizer Healthcare India Private Limited Finance Scheme for Employees at Aurangabad, 2019. The assessee had received ₹54,64,480 as a full and final settlement following his voluntary retirement under the scheme introduced due to the closure of the company’s Aurangabad plant. During assessment, the Assessing Officer treated the payment as arising under a voluntary retirement scheme, recomputed the relief under Section 89, and restricted the relief from ₹18,28,958 to ₹12,82,510.
During appellate proceedings before the CIT(A), the assessee submitted that he had withdrawn his claim under Section 89 during assessment and alternatively claimed that the ex gratia and related payments constituted capital receipts not chargeable to tax. The assessee relied upon several judicial decisions and orders in cases involving similarly placed employees, including decisions of the Pune Bench of the Tribunal. The CIT(A), however, rejected the claim and enhanced the assessment by holding that ₹53,52,775 received under the financial scheme was taxable as “Income from Other Sources” under Section 56(2)(xi). The appellate authority also directed withdrawal of the relief allowed under Section 89, holding that the amount represented compensation or other payment received in connection with termination of employment and was taxable under the newly inserted provision applicable from Assessment Year 2019-20.
