Shrikant Anantrao Zori Vs ITO (ITAT Pune)
The Pune Bench of the Income Tax Appellate Tribunal considered the assessee’s appeal against the order dated 19.02.2024 passed by the Commissioner of Income Tax (Appeals)/NFAC for Assessment Year 2020-21. The principal dispute related to the taxability of amounts received by the assessee under the Financial Scheme 2019 introduced by Pfizer Healthcare India Private Limited following its decision to cease manufacturing operations at its Aurangabad plant. The assessee also challenged the denial of relief under Section 89(1), disallowances under Sections 10(5) and 10(10C), and addition relating to a superannuation scheme.
The assessee filed the return declaring total income of ₹39,29,770 and claimed relief under Section 89(1) of ₹6,57,914. During assessment proceedings, the Assessing Officer noted that the assessee had received amounts under the employer’s Financial Scheme, including ex-gratia compensation and notice pay. The Assessing Officer held that only the compensation component qualified for relief under Section 89, restricted the relief to ₹1,48,312, and completed the assessment by making additions on account of disallowance of exemptions claimed under Sections 10(5) and 10(10C) and an amount received under the Hospira Healthcare India Private Limited Senior Executive Superannuation Scheme.
Before the CIT(A), the assessee withdrew the original claim under Section 89 and alternatively contended that the ex-gratia, severance pay and incentives constituted capital receipts received on account of premature cessation of employment and loss of the source of income. Detailed submissions were made regarding the terms of appointment, the voluntary nature of the Financial Scheme, the absence of any contractual obligation on the employer to make such payments, and various judicial precedents supporting the claim that the receipts were capital in nature. The CIT(A) reproduced the assessee’s submissions but did not adjudicate the principal ground relating to capital receipts and upheld the assessment.
