IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.07.2010 CORAM: THE HONOURABLE Mr. JUSTICE F.M.IBRAHIM KALIFULLA and THE HONOURABLE Mr. JUSTICE M.M.SUNDRESH TAX CASE (APPEAL) No.532 OF 2010 and M.P.No.1 of 2010 V.Natesan .. Appellant. /versus/ The Asst. Commissioner of Income Tax, Circle-I, Tambaram, Chennai – 600 045. .. Respondent. Tax Case (Appeal) filed under Section 260-A of the Income Tax Act, 1961, against the order passed by the Income Tax Appellate Tribunal, Madras "C" Bench, dated 13.6.2008 in ITA No.2401/Mds/07 Assessment Year 2004-2005. ( ITA No.262/06-07 dated 3.9.2007 on the file of the Commissioner of Income Tax (Appeals) IX, Chennai against G1/PA No.AAAPN2241F dated 9.3.2006 on the file of the Assistant Commissioner of Income Tax, Circle-I, Tambaram) For appellant : Mr.S.Vaidyanathan For respondent : Mr.J.Nareshkumar. Senior Standing Counsel for Income Tax Department. (JUDGMENT OF THE COURT WAS DELIVERED BY F.M.IBRAHIM KALIFULLA,J.) The Assessee has come forward with this appeal in which the following substantial questions of law have been raised:- "(1) Whether on the facts and circumstances of the case, the Tribunal was right in allowing the Appeal of the Revenue when the tax effect is less than Rs.2 lakhs and when the revenue is governed by two notifications of CBDT Instruction No.2, dated 24.10.2005 and Instruction No.5 dated 16.7.2007? https://hcservices.ecourts.gov.in/hcservices/ (2) Whether on merits of the case, the order of the Tribunal was right and justified u/s. 10 (10C) of IT Act when the assessee is under public sector?" 2. We need not examine the first question of law inasmuch as the second question of law which has been raised on merits, deserves acceptance. In this context, it is worthwhile to refer the Communication of the Government of India addressed to all Chief Commissioners of Income Tax, All Directors General of Income Tax and Director General (Legal & Research), dated 8.5.2009, which reads as under: " Subject: Taxability of ex-gratia amount received by Reserve Bank of India's Employees under Optional Early Retirement Scheme (OERS) during Assessment Year 2004-05 – reg. Sir/Madam, Central Board of Direct Taxes vide its letter F.No.225/74/2005-ITA-II dated 20.10.2005 relying on a letter from Reserve Bank of India (RBI), had advised all field formations that the Optional Early Retirement Scheme (OERS) of RBI does not conform with the provisions of Rule 2BA of Income Tax Rules, 1962. Accordingly, the amount received by the employees of RBI opting for OERS did not qualify for exemption under Section 10(10C) of Income Tax Act, 1961. 2. It has now been brought to this notice of Board that the Hon'ble High Court of Bombay vie its order dated 4th July, 2008 in the case of Commissioner of Income Tax Vs. Koociathil Kallyatan Ambujakshan (2008) 219 CTR (Bom) 80 has held that Optional Early Retirement Scheme of RBI satisfies all the conditions of Rule 2BA and amounts received by retiring employees thereunder were eligible for exemption u/s. 10(10C). That judgment has become final. 3. The matter has therefore been reviewed in the Board in view of the aforesaid order of Hon'ble High Court of Bombay and it has been decided that the employees of RBI who accepted OERS would be entitled for the benefit of Section 10(10C) of Income Tax Act, 1961." https://hcservices.ecourts.gov.in/hcservices/ 3. In fact, in respect of another employee of Reserve Bank of India, who had gone on Voluntary Retirement under the Scheme, this Court on 25.11.2009 passed orders in T.C.No.1101 of 2008, by applying the decision of the Supreme Court in Civil Appeal Nos.6997-7002 of 2009 arising out of SLP (C) No.15805-15810 of 2008, granted relief in favour of the assessee. As the case of the appellant is squarely covered by the above referred to decision of the Supreme court as well as the decision of the Division Bench of this Court, dated 25.11.2009 and also having regard to the communication of the Government of India, making it clear the employees of Reserve Bank of India who accepted Optional Early Retirement Scheme, are entitled for the benefit of Section 10(10C) of the Income Tax Act, 1961, the Tax Case (Appeal) stands allowed. The impugned order is set aside and the second question of law is answered in favour of the assessee. No costs. Consequently, connected miscellaneous petition is closed. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar sai To 1.The Assistant Registrar, Income Tax Appellate Tribunal, Rajaji Bhavan, III Floor, Besant Nagar, Chennai-90. 2.The Commissioner of Income Tax (Appeals) IX, Chennai. 3.The Asst. Commissioner of Income Tax, Circle-I, Tambaram, Chennai – 600 045. 1 cc to Mr.S.Vaidyanathan, Advocate, Sr.No.50220 1 cc to Mr.J.Nareshkumar, Advocate, Sr.No.50386 T.C.(A) 532 OF 2010 JRG {CO} TP/30.7.2010. https://hcservices.ecourts.gov.in/hcservices/