Case Law Details

Case Name : Smt. Uttara Ghosh Vs Deputy Commissioner of Income-tax, Circle-22 (ITAT Kolkata)
Appeal Number : IT Appeal No. 1346 TO 1383, 1407 AND 1559 (KOL.) OF 2011
Date of Judgement/Order : 30/03/2012
Related Assessment Year : 2004-05
Courts : All ITAT (5168) ITAT Kolkata (403)

IN THE ITAT KOLKATA Bench ‘B’

Smt. Uttara Ghosh

Versus

Deputy Commissioner of Income-tax, Circle-22

IT APPEAL NOS. 1346 TO 1383, 1407 AND 1559 (KOL.) OF 2011

[ASSESSMENT YEAR 2004-05]

MARCH 30, 2012

ORDER

1. The issues involved in all these appeals are common and, as learned representatives agree, whatever we decide in one appeal will be equally applicable in all other cases. The material facts of all the cases, barring difference in amounts etc. are also similar. We, therefore, take up all these appeals together. We will take up ITA No. 1407/Kol./2011 for A.Y. 2004-05 as the lead case and the decision in the same will be applicable for all other appeals as well.

2. By way of this appeal, the assessee-appellant has challenged correctness of learned Commissioner of Income Tax (Appeal)’s order dated 12th August, 2011 in the matter of order under section 154 w.r.s. 143(3) for the assessment year 2004-05 on the following grounds :-

“(1)  That on facts as well as on law, the order passed by the ld. CIT(A) is perverse, biased, arbitrary and liable to the quashed.

(2)  That, on facts as well as on law, the ld. CIT(A) has failed to appreciate that non-consideration of the decision of the jurisdictional High Court on identical issue gives rise to a mistake apparent from the record within the meaning of the provisions of section 154.

(3)  That, on facts as well as on law, the ld. CIT(A) has erred in holding that the issue raised by the appellant is debatable and outside the scope of the provisions of section 154.

(4)  That on facts as well as on law, the ld. CIT(A) has erred in confirming the order of the ld. Assessing Officer in denying exemption of Rs. 5,00,000/- under section 10(10C) in respect of the amount received by the appellant under the VRS scheme of HSBC Bank, the employer, alleging that the said scheme is not in accordance with the requirement as prescribed in Rule 2BA of the Income Tax Rules and in total disregard of the decisions of the jurisdictional High Court and the Jurisdictional Appellate Tribunal on the identical issue.”

3. The issue in appeal lies in a very narrow compass of material facts. The assessee before us is a former employee of Hongkong and Sanghai Banking Corporation Limited, Kolkata (in short HSBC). In the relevant previous year, she received an amount of Rs. 25,42,729/- from HSBC under the Voluntary Retirement Scheme. She accordingly claimed a deduction of Rs. 5,00,000/- under section 10(10C) of the Income Tax Act, 1961. The Assessing Officer declined the said claim on the ground that “the assessee has received VRS benefit exceeding this amount (maximum amount permissible under Rule 2BA), she is not entitled to deduction under section 10(10C)”. Subsequently, on 09.03.2010, the assessee moved a rectification petition under section 154 of the Act and requested the assessee to grant deduction under section 10(10C) for an amount of Rs. 5,00,000/-. This claim of the assessee was said to be supported by Hon’ble Jurisdictional High Court’s judgment in the case of SAIL DSP VR Employees’ Association, 1998 v. Union of India [2003] 262 ITR 638. Even though the said judgment was passed on 12.02.2003, it appears somehow the judgment escaped the attention of the assessee as also the Assessing Officer. In substance, the prayer of the assessee was that, in conformity with the correct legal position and as held by the Hon’ble Kolkata High Court in the case of SAIL DSP V.R. Employees’ Association, 1998 (supra), the deduction under section 10(10C) for an amount of Rs. 5,00,000/- be allowed. The Assessing Officer declined the aforesaid request for rectification on the short ground that “the purview of section 154 is restricted to the issues, which are not considered and decided in the orders passed by the Assessing Officer”, and “thus the rectification petition filed by the assessee on the issues already decided by the A.O. in his order u/s. 143(3) is outside the scope of section 154 of the I.T. Act”. Aggrieved, the assessee carried the matter in appeal before learned CIT (Appeals), but without any success.

4. Learned CIT (Appeals) was of the view that since the amount received by the assessee on her voluntary retirement from HSBC was in excess of the maximum amount permissible under Rule 2BA, she is not entitled to deduction under section 10(10C). He accordingly rejected the claim of the assessee. While doing so, ironically he relied on the judgment of the Hon’ble Calcutta High Court in the case of SAIL DSP VR. Employees’ Association, 1998 (supra) itself, by observing as follows :-

“9. As regards ground No. 3 the issue raised in the ground is not tenable as the reliance placed by the assessee on the ratio laid down by the Hon’ble Calcutta High Court in the case of SAIL DSP VR. Employees’ Association, 1998 v. Union of India & Others 262 ITR 638 is misplaced as the facts in that case are different from facts of the present case. The case relied upon by the assessee pertained to employees of SAIL wherein the Hon’ble High Court has given the finding that the scheme for Voluntary Retirement floated by SAIL confirmed to Rule 2BA. The Hon’ble High Court also gave the finding that nowhere there was any provision in the scheme which could be said to be in conflict with the retirements of Rule 2BA. However, in the present case, the issue relates to the Voluntary Retirement Scheme floated by the Hongkong and Sanghai Banking Corporation Limited, and the Assessing Officer gave the finding in the assessment order that the scheme was not in conformity with Rule 2BA of Income Tax Rules, 1962. Hence, there is no error apparent from the records in the order passed by the Assessing Officer. Hence this ground is also dismissed”.

The assessee is aggrieved and is in appeal before us.

5. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position.

6. We find that as held by Hon’ble Calcutta High Court in the case of SAIL DSP VR Employees’ Association, 1998 (supra), undoubtedly Their Lordships held that there is no conflict between the VRS Scheme of the SAIL employee and Rule 2BA, but Their Lordships also observed as follows :-

“An expression used in the statute is not always to be interpr4eted literally or grammatically. Sometimes, it has to be interpreted having regard to the context in which the expression is used and having regard to the object and purpose for which the same is enacted. Section 10(10C) was inserted in order to make voluntary retirement attractive so as to reduce human complements for securing economic viability of certain companies. This object was elaborated by various Departmental circulars and explanatory statements issued from time to time. Similarly, r. 2BA which was inserted by the IT (Sixteenth Amendment) Rules, 1992, were amended from time to time. All these go to show that this was intended to make a voluntary retirement more attractive and beneficial to the employee opting for voluntary retirement. Therefore, this has to be interpreted in a manner beneficial to the optee for voluntary retirement, if there is any ambituity”.

7. It is thus free from any doubt that, as held by Hon’ble jurisdictional High Court, that the provisions of section 10(10C) are to be “interpreted in a manner beneficial to the optee for retirement, if there is any ambiguity”. In view of this binding legal position, it is clear that on the point of ambiguity, if any, an interpretation in favour of the assessee is to be adopted. That is how, according to Hon’ble jurisdictional High Court, section 10(10C) is to be interpreted.

8. Let us now take note of a Third Member decision of this very Tribunal in the case of Dy. CIT v. Krishna Gopal Saha [2009] 121 ITD 368 (Kol.) wherein the assessee was a former employee of Standard Chartered Bank and admittedly the voluntary retirement scheme offered by the SCB was not in conformity with Rule 2BA of the Income Tax Rules (as noted in paragraph 3.1 of the lead order). Yet, the Third Member decision was that to the extent of Rs. 5,00,000/- the assessee was eligible for deduction u/s. 10(10C). In coming to this conclusion, the Tribunal, inter alia, took note of Hon’ble jurisdictional High Court’s guidance in the matter. What is held by the Tribunal in this Third Member decision is at the minimum a possible view of the matter, and so far as this Division Bench is concerned a binding judicial precedent.

9. No doubt in a normal situation, so far as matters capable of two views being taken will be outside the ambit of section 154. However, right now, we are dealing with interpretation of section 10(10C) and so far as this interpretation is concerned, law laid down by Hon’ble Calcutta High Court is that an interpretation in favour of the assessee is to be adopted. The real question, therefore, is whether or not these decisions of Hon’ble jurisdictional High Court can be subject matter of rectification under section 154. On this question, we find guidance from Hon’ble Supreme Court’s judgment in the case of Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 wherein Their Lordships have held that non-consideration of a judgment of Hon’ble jurisdictional High Court is also a mistake apparent on record, which can be rectified under section 154. What follows, inter alia, is that in a situation in which Hon’ble jurisdictional High Court is not followed, such a non-consideration is clearly a mistake apparent on record. That is precisely what has happened in this case. The Assessing Officer disregarded Hon’ble jurisdictional High Court in the case of SAIL DSP VR Employees’ Association, 1998 (supra), on the ground that this issue has already been decided in assessment order and, therefore, it cannot be reconsidered, even in the light of Hon’ble jurisdictional High Court’s decision. learned CIT(A), on the other hand, referred to an aspect of the said decision. In our considered view, what ought to have been examined by the Assessing Officer was whether, in the light of the principles laid down by Hon’ble jurisdictional High Court, the interpretation canvassed by the assessee could be accepted as one of the possible views of the matter. That exercise has not been done.

10. For the reasons set out above, we vacate the orders of the authorities below. Having regard to the fact that the issue was covered in favour of the assessee by a Third Member decision of this Tribunal in the case of Krishna Gopal Saha (supra), which constituted a possible interpretation, and which, in the light of SAIL DSP VR Employees’ Association, 1998 case (supra) ought to have been adopted by the Assessing Officer, we uphold the grievance of the assessee. The Assessing Officer is accordingly directed to give relief.

11. In the result, I.T.A. No. 1407/Kol./2011 is allowed. All other appeals are also allowed in the same manner and to the extent indicated above. These observations will apply mutatis mutandis to those cases as well.

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