ITAT Pune: Re-adjudication on Relief u/s 89 for Employee under ERS Scheme

Anita Anil Rangale Vs ACIT (ITAT Pune)

Introduction: The recent order from the Income Tax Appellate Tribunal (ITAT) Pune in the case of Anita Anil Rangale vs. ACIT addresses the intricacies of relief under Section 89 of the Income-tax Act for an employee opting for the Early Retirement Scheme (ERS). The appeal stems from the denial of relief by the Assessing Officer (AO), raising questions about the nature of the scheme and the employee’s entitlement.

1. Background of the Case:

• The appellant, Anita Anil Rangale, was a salaried employee of Colgate Palmolive (India) Ltd., Aurangabad Unit.
• The employer introduced an Early Retirement Scheme (ERS), and the appellant opted for it, seeking relief under Section 89 in the return of income.

2. AO’s Decision and Denial of Relief:

• The AO, challenging the nature of the retirement, considered the received amount as compensation, not a capital receipt.
• The relief under Section 89 was re-calculated as profits in lieu of salary, as per Section 17(3), leading to a denial of the claimed amount.

3. Additional Evidence – Key Turning Point:

• The appellant, during the proceedings, introduced a crucial letter from Colgate Palmolive (India) Ltd. dated 06.10.2023.
• The letter clarifies that employees, including the appellant, were not entitled to the ERS, and the company had no obligation under the scheme to its employees.

4. ITAT’s Decision and Re-adjudication: