CIHHATTISGA 3 HE HIGH COURT OF JUDICATU AT BILASPUR IN T RE 1 CASE 'NoJL OF 20 i i x i APPELLANT mvi Banch isim Inc Tax fcer ircle-1 ,Korba ( C G ) EN a I63— mentad lay; Sh“ w} r ara a An. Main ’oéd, Urga, Korb C G ) ( . ma ? d ‘imms ax Case lncome ax apeal uls 20 ) of Income Ta c 196 RH T ome Ofi C § VERSUS Shi P‘s Rm nad R ‘ a RESPONDT Ll R P T _(_ T p 6 A x At 1 HIGH COURT OF CHHATTISGARH AT BILASPUR DISION EH: ON. MR. DHIRERA MISHRA & ON. MR. R.N. CHANDRAKAR, JJ' TX ASE N.15 OF 200 Incoe Tax Oficer, Korba Vsus Su , K TAX CASE NO.17 OF 2007 Income Tax Officer, orba ersus Dhan i Srivas House No.329, Ward No.20, Amayaiya Para, orba APPELLANT RESPONDENT AT PPELLAN RESPONDENT Shri Ram Sevak Gup‘ra, HIG—83, M.P. Nagar, Korba TAX CASE NO.19 OF 2007 f m Assisf'um‘ Commissioner o Incoe Tax, Circle Kor-ba. Shri habbir hmed, D-IZO, ousing Board Coony, alco, orb Vs erus RESPONE DNT TAX CASE N.20 O QF 2007 ssistanf Commissioner ,of Incoe Tax, Circle Korba hi Murari asti, Korba. APPELLANT Vrsu es A m . RESPONDENT Lal Pande, y Purani TAX CAE S NO.22 OF 2007 isfa Coissionr o Inco ax, Circle Korba ri Shiv umar 'Sahu, D—65, B Colon,'Balco agar, Korba (CG AE PPLLANT Ver sus T CE No F 7 'A'X AS .23 O 200 I Of, Kb ncome Tax ficer Circle-1 ora (CG) ESPOEN Shr‘ .Paras Ram Anand, Main Road, ,Urga, Korba (CG) Ver sus TAX CASE N.24 O OF 2007 Assistanf ommissioner f ncoe Tax, Circle: Korba (G) APPELLANT IV BNC H ND H A C O 7 m f er K V APPELLANT S A H l B Ka Sr B Assnf mme f me T . RESPONDENT Sh K H y N O APPELLANT RNDT i , C o Im C V ersus RESPONDENT Eqbal Ahmed Khan, War-3, Shanfi Nagar, Behind Karma Talkies, Balco Nagur, Korba (CG) AX CASE NO.25 OF 2007 Assisfanf Commiésioner of Incom Tax, Circle: Korba (CG) Versus 4PPELLANT b Shri Si’ra Ram Singh, Balco, Kora (CG) TAX CASE N026 OF 2007 Assis‘ranf Commissioner of Income Tax, Circle: Korbo (CG) Versus e espo'NDENT ' APPELLANT Sm‘i. Omono Krishnan, Wife of Lof Shri K.R. Krishnan, R.P. Nogor, Korbo (CG) ‘i TAX CASE No.27 OF 2007 Assis’rom Commissioner of Income Tax, Circle: Korbo (CG) APPELLAT N Versus EsPONDENT Shri RB. Singh, Jogroha, Risdi, Korba (CG) ‘ TAX CASE No.28 OF 2007 Assistonfr Commissioner of Income Tax, Circle: Korbo (CG) 'Shri D.B. Rohfore, Near Old Primary chool, Baraporo, Korbo (CG) & TAX CA5E NO.29 OF 2007 Assis’mnf Commissioner of Income / Tax, Circle: Korbo (CG) Versus a RESPONDENT Shri Gajadhor Prasad Sohu, MIG-II, APPELLANT ' Versus 119 M.P. Nagar, Korbo (CG) RESPONDENT APPELLANT v J. Pf resen: Mr. S. Rajeshwor Roo’ Jr. Sfonding Counsel for appellants in all fhe appeals. Mr. Shoshank Dubey, Sr. Advocate wi‘rh Mr. Neelabh Dubey, Ad The respondenf in oll fhe appeals. vacate fo r l -..-.. -~_._u;——__- _ d1 e n RESPONDENT R S k} ORDER (Passed on 1L.6. 2009) - Dhikendra Mishra, J 1) .These appeals are being disposed of by This cammon order as Common subsfan’rial quesTion of law‘ is involved in fhese appeals 'whe‘rher‘ on *he foc'rs and in The circumsmnces of The case ‘rhe Income Tax Appeiio‘re Tribunol (for breVI‘i’y fhe Tribunal) was Justified In low In direchng the AsseSSmg Officer (for shorf ‘A.O.) to aIIowVfhe ciaim of fhe assesse for exemp'rion under Section 10 (10C) of The Income Tax Act, 1961 (for shorf 'fhe Acf‘) to fhe ex’ren‘i’ of Rs.5,00,000/- by applying the prospecfive amendmem‘ refrospecfively? For fhe pdrpoSe of This order reference is mode io the facts 2)' of Tax Cosz No 17/2007 (income Tax Officer Korbo Vs Ram Sevuk Gupta) Briefly stated, facts of the ca_5e are that the respondent was an employee of Bharat Aluminum Company Ltd. (Balco), _Korba.e He filed return offin’come for the assessment year 2003-04 declaring taxable income of Rs 3 22 315/- v - ’ 3) Subsequently, he reVIsed the taxable income at Rs 98 800/ The A O selected his case for Scrutiny and issued notice under Section 143 (2) of the Act During the assessment proceeding it was noticed that the employer of the respondent had determined the ex- . ' « gratia amount of voluntary retirement at R57 13 513/- and out of thts amount only 1/5’“ ie Rs 1 42 703/— was actually I paid to the respondent in the aSSessment year and the balance amount was to be paid in four installments in the next financial years. The asses’see, however, claimed deduction for a total'sum'of Rs.5,00,000/-, maximum limit for exemption as ‘ per 'Section‘io (10C) of the Act. The A.O. allowed exemption of Rs.1,42,703/- as the amount which was actually received by the assessee and added back rest of the amount of ex- gratia‘payment clamed by the assessee. e 4) ' reTiremenT of The respdndenT 'aT Rs 7 13 513/- which was V ' ‘ rughtly taken Info accoun‘r by ’rhe employer as salary Income In 731 ' The flnancual year under conSiderafion on receivable basis, buT pmd‘ ‘rhe amoun'r of Rs.1,42,703/—. The rsum of ex—graha‘ which was acfually receivedpwas fo be, Taken info considerafion for exemp‘rion under Secfion 10(10C) subjecf To maximum limiT of Rs.5,00,000/-. The employee is qualified for exempTio‘n only for The amounT receiyed by‘him subjecT To a maximum of Rs 5 00 000/ Till the assessmen? year 2003—04, The employee was enTITled for exempTion only for The amounT received by him The amended provusuon whereby The words or receivable" were added came Info effecT from 14 2004 Since The case of The respondenT perTams To pre amended " period he was enTITled for exempTIon for The ex graTia amounT acTually received during The assessmenT year he}; Rs.1,42’70i3/-. 6) On The oTher hand, learned Senior Counsel for The respondenT supporTed The impugned ordern v a, 7) ‘We have heard learned counsel for The parTies. s) The only issue In TheSe appeals Is wheTher The sum paid on volunTary reTIremenT scheme subJecT To limTT of Rs 5 Lac Is exempTed from being charged for Tax under SecTion 10 (106) 'u The assessee preferred an appeal ‘againg‘sf 1'he order ‘da’red 25.4.2005 of ’rhe A.O. The CIT Appeols following The decision of ’rhe ITAT, Nagpur in fhema'r’rer of ,Firfu Ram YadaV Vs ACIT, par-fly allowed fhe appeal. The appeal preferred by fhe deparfment was again dismissed bvy the fribunal by fhe impugned order 5) Learned counsel for The appellanf submits fhaf ’rhe frlbunal ‘falled To opprecuafe Thaf fhough 'fhe employer had deferm’ined fhe ex-grafiah paymenf ion fhe volun‘rary i e of The Acf,’ even if The paymen‘r is made in ins’raIlmenTs To b pai n e e efbr‘e deal'ing with the above question, we propose f0 deal iTh fhe relevan'r sTaTU’ror- provisions. Secfion 10 (10C) of he Act, rior ‘to ’amendmen’r n the ear 2003, reads as n‘ ye - I s ; /7 mpy; I) stase ude a etra Sa (i/ an authority eblihd nr Cnl, tte ‘ or Prni 'o V rt ”v) a coopratie cety r ( ev soi: o w a Univety tablihed or icopatd b o ndr () rsi ess nrore y r ue a Cl Sa vini iitution ece 'Uniers under ctn o ivi Grts , 196 II) n tt hl i t eanng laus cion t‘its chnolo ct 6 o [( Viia) ay State GoVernmnt: or] - n e [— e nrl o or (w’ib) th Ceta Gvernment; ]; - ntio an ornc ouou I an i tae, as aze C si tn nt i bel a i ns f namn :te ntral orent a otiiato n t cl seci in al ' ir r em sice, Wi che ses of‘ luntary rerement or in the case of fa pc sr coma rfred _ toH in “sb-clause (), a scheme of voluny ti ubli ecto pny eer u I tar pti, xen o not ced fiv searaon to’the ett such amunt does exe e I id mae r trit or set versie r Institute eer to su-clause (V/'/) and (V177), as the case may be, governing the payment of such amount are framed in accordance with such guidelines (including inter alia criteria of economic viability) as may be preseribed: i .Provided further that where exemption has been allowe to an employee under this clause for’any assessment year, no exemption thereunder s hall be allowed to him in relation to any other assessment year: ClauSe (10C) of Section ‘10 of the Act has‘been amended by the‘Finance Act, 2003 w.‘e.f. 1.4.2004 and the vwords “or receivable" were added ater the words “c. d i subsquenf yars? B w y t p i y under:- any amour received by an emploe of () a public ector company or () any othercoan or ovical Act: r (/) a local [authoiy; or] entra tte or Procal Act and an nst dlard to be avity Seio 3 f the Unersty an Commission Act 5: or (V an Idian Insitue of‘Tecnoogy withn he mi of ce (g) of Set 3 of heInsttue of Tegy A, 191: r (viic) an‘istitun, hvig imptae thrght ndia or notfication in y Stateor m the Sts Offlcml the Gtte, entral pecfy Governme ths m bag; , b or] (vii) such ititute o mageet as h Ce Gvenm my, by nfcin i he Offiia Gazette, pfy this behf,] (on his) voluntary retement o trination of his erv in accordance th any sme or chem vo ; akh‘rupeesz] Provde that the schemes of the said copnis o auhoies ociies or Uniits o the s rfred in bs d f reeived" 10 i h Ac‘ es 'a‘i n sa is quo’red herein below:- “15. Salaries—The following income shaii be chargeable To income fax under The head “Salaries"— (a) any salary due from an employer or a former employer to an assessee in the previous years, whether paid or no‘r: (b) any salary paid or allowed to him in the previous year by or on behalf of on employer or a former employer though not due or before it became due to him: (c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if ‘ not charged to income tax for any earlier previous year." Section 17 (3) (i) of the Acts reads as under:- “5alary”, “perquisite” and “profits in lieu of salary" defined.— For the purposes of Sections 15 and 16 and of this section.-— x ‘r (1) “Salary" includes— (/) wages; (I'I) any annuity or pension: (17/) any gratuity; (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages: (v) any advance of salary;............... 3 ‘profits in lieu of salary’ includes- (i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto." Section 10 (10C) of the Act was inserted in order to make voluntary retirement attractive so as to reduce human complements for securing economic viability of certain ompanies. It was intended to make voluntary retirement more attractive and beneficial to the employees opting for voluntary retirement. Therefore, this has to be interpreted in a manner beneficial to the optee for voluntary retirement if there is any ambiguity. 12) Section 15 (a) of the Act provides for chargeability of salary to tax as soon it becomes due, though not paid. As soon the salary becomes due, the incurring of the liability is complete. As soon the liability is incurred, it becomes a deeme 11) ) Secfon 15 of fe r dfine slares' ad The me () c , d 4 p f 3 (2) of The ACT In *he resent case Thcugh The amount o onthl benefl? payabe under the volunfary re’rtremen my l ’r scheme conSIs‘rs of salar or benefn‘l‘ In leu o salary, as defmed m Sechon 17 (1 or 3 read wuT Sechon 4 Z) o Prlor fo amenmenf m fhe cf 200 any amoun recelved" by an emloee on is voluntary retiremen I ccordance wuth any sceme o vounary retlrement was not o l ' ‘ “ ‘y f 00 00- Under the scheme hablllty to pay was Incurred and t amount became paable at the time when the empoyee wa released haVIng opted for the voluntary retirement under t scheme Therefore this Is an amount which Is receivae b J dg the employee at the time of voluntary retirement accorm to the scheme and became chargeabe to tax uner clauSe (a l of hg pid Section 15 of the Act even touh not a S () p p l ection 10 10C of the Act seCIfIes that In comuting tota Income received by any categor of employee escried In te of is I, t g f vy l f doe no 5 L The second proVIso t e section further las that where exemptionas e ollowed to an empoyee unde that clause, or any assessme y p l h in ,- r y f h L c p d ii s a t however hihl or lowl placed hemay be. It brings to charg 1) any salar due, in the previous years, wheter pad or not 2) advance salary; and (3) arrears ‘of saary. Thus, t mount payable under the vountary retirement scheme te Act V py h t n ’ a h f lt be Included In computing his tota Income for the preVIous ear Exemption Is avallable to the extent o Rs 5 0/ , b he , y l s ‘ he a z bl y voluntary elent ermination of his serVIce alon With a scheme or schemes o oluntar retirement Is not to be Incuded to the extent o uch amount s t exceed Rs ac o l th y h ben f l r f nt ear, no exemtion thereunder shal be allowed, to im ' elation to another assessment ear. Section 15 o te Act is ouched in the widest ossible terms to inclue wthn it mbit every kind of remuneration of every kind of servan, gy y e ( y h i : ( l he a l is ion a the time sect t : y I f ) () h 3 ( f‘ d A 3 t h ' " l d ) f ' ”- y db h h rtrem or 'xx salary’wifhin fhe meaning of Section 171(1) or, (3) redd wHh Secfion 43(2) of ’rhe Act. 14) In the ma‘Her of SAIL DSP VR Employees Association 1998 Vs. Union of India & o‘rhers’repor'fed' in (2003) '181 CTR 367 V the aforemeniioned‘ question" of law came, fo considerofion before fhe Division Bench of High Coum‘ of Calcuffa. Relying upon The judgmen‘rs of fhe Hon'ble Supreme Cour? in the maifers of C’BDT‘ Vs (Adifya B’irlal‘reporfed in (1988) 67 CTR (so) 165 : p988) 17o, ITR 137.(sC) and I K.P. Varghese Vs. ITO reported‘in (1981) 24 CTR (5C) > 358 (1931) i31 ITR 597 (so) u was held Thai The amouni Lrecelvable towards monthly benefits prowded under the j] scheme of volunfary reflremen‘r only quolifles for exemp‘horx under Section 10 (10C) To The exfenf of Rs.5 Lac. Other amounts payable under differenf heads; such as encashmenf of leave pay medical benefif grafuify e‘ic Would nof qualify for exemphon under Sechon 10 (10C) If Is furfher held ’rha‘r the amount which Is receivable a1 the time of voluntary retirement according to the scheme and became chargeable to tax under clause (a) of Section 15, even though not paid, is exempted from being charged. totax by reasons ofSection 1O (10C) to the extent of Rs.5 Lac. Even if thekpayment’ is stretched "overa‘ period of years, the same wo‘uld not become chargeable to tax in any’subsequent assessment year. 15) Now, we propose to examine whether it wouldbe hit by the second proviso tosection 10 (10C) of'the Act. Second proviso V provides That ‘exemp’fion undér‘ Seéfion 10 (10¢)‘fo the éxj‘enf that the benefit of exemption is available, only in one- assessment‘year and would not be available for any other assessment year, once availed of. 16) Vide amendment by Finance Act, 2003, clause (10C) of Section 10 was amended and the words 'or receivable' were r H added after the words ‘re’ceived' The above amendment came In’ro force wef 142004 In cerTa’m cases Some of ’rhe employees avmlmg of volumary reTIrement scheme were , facmg problem In case The amount was given To them m ‘ ‘mstallments over a number of years Keeping In View the above fact a departmental Circular No.7/2003 dated _ 5.9.2003 was‘issued which reads as under:- “9.1. Undef‘ The. exisfing'pr‘ovisi'on conmined in clause,(10€) of secfionkio, any amouhf received by 'an empioyee of a public SecTor company or any other company orf an au‘rhor‘lfy established under a Cen‘rr‘al STa‘re or' Provmcml Act or a local authorlly or' a cooperahve Secte‘ry, or a Umver'sH‘y, ~ or' Indian Insh‘ru’re of Technology, or Sfale or CenTral Governmen’r or an Institution havmg nahonal/Sfa’re Ievel Impor‘l’ance or a‘_instilufe of‘ managemen’r nohfled by the Cenfral ’l Goverhment, afar, af "rhe‘ time of voluntary y retirement, or in the-case of public sector companyya scheme of voluntary separation,_to the extent such amount does not exceed five lakh rupees is not V‘ Included In computing the total Income of such employee. However, some of the employees availing, of VRS were facing problems in case the amount was given to them In Installments over a number of years L 9.2L To solve this problem clause (10C) of section 10 has ’been amended by the Finance Act 2003 to provude that any amount not exceeding five Iakh rupees received or receivable (I.e.‘ ’even’lf' received in installments) by' anemployee on his voluntary retlrement or termination of his servnce wull not be _ ~Included In computung the total Income of such A‘ “x. empoyee. Other condifions, as; well as fhe overall limi’r shall however, remain unchalnged. his amendmem‘ will fake effecflfr‘om 1 April, 2004 T ” , nd will, accordingly, apply in relafion T t ssessment ear 2004—2005 and ‘subSeuenf ear's q’n d i pi “ n J 17) The co're uestio for our consiera’rion in these appeals s The inferrefalon of expression amounf received" in Sectio 10 (106) of the Act rior to Amenment, 2003 s not aways to b nterpreted literally or grammatically. Sometimes it has to be interreted havin reard to context in wic expression i used and having regard to the object and purpose for whit h same is enactd. Tax laws have to be interpreted reasonably and in consonance with justice adopting pervasiv approach. Contextua meaning as to be ascerained and give e A y d f h . It is well recognized princile that ubsequent legislation may be looked at in'order to see what is th‘e roer nterpreatio t p p l l t obscure or ambiguous or readily capable of more than one Ip C nterretation. (Staterof Bihar Vs.'$.K. Roy, AIR 1966 S g d i ( e l A 5$ he Hon'ble Aex Court in the matter of Thiru anickam an t p M d Co Versus The State of Tamil Nadu reorted in (1977) S g () f S it h th s made clearby the amendment made in the centra Act by t Central Sales Tax (Amendment) Act 1972'. It has ee fur d t te f h e f ) o i 5, as is given 18) xpression used n the statut E i e i p g g hh s h/ te e : e l h t n ffectto.‘ provision for deduction, exemption or relief should be constrUed reasonabl an in favour o te assessee ' pp itn o be ut uon the earier Act where the earier Ac is While interpretin the words “refUnded” ‘as‘use in/ clause b) of sction 15 of the Centra Sales Tax ct, 19 ) 1995. ‘ p 1 CC 199 held that ambiguity in the languae of clause b o ection 15, as eXIsted at-te relevant time, e matter i l he , bn ther hel tha h act tat th amendment'o clause (b f secton 1 w not like some other provison l a o he a y q y." p d . i l e p s efrosp’ecfive effec of r‘aieriall affécf Th r t n fy e pOsi s alread mentioned aov'e, te eisature as r m h ipi e pi fhy i n iamendmen‘l which is by o a bs s fu al onsg t rl suc amendmenf Is no? iven re‘rros 0 IT cou not be The mfenhon of t beneit under Section 1 10C of t lred br 14.200 to r s extent te mont atuall receive vy phular assessment year and o other emloyees of the some or oe oluntr retirement after 14 200 io y as well as the amount eceivable b te subs a herefore we are of the consudere nn w f d ure .hre o t eent ac ’e sad amoun i xemted rom ein care to tax reason of Section 1 10C of the Ac fiOn. A y b h lgl a esul’r of The amendent clarified wa? was mlcit in fh rovsions as e exisfed earler A way of clarificafion f an erlier amiguou provumn can be usel d In cirum he ealer :provusuon even fhough h g peci Ive effect 2) ld he legislature to extend f 0 () he Act to the employees who ret efoe .4, estrict the um to the h au cy d by them atlthe time of oluntar retirement for that rtic t p ganization who ptd for vay 4 to extend that benefit r the amount received b them r y hm i ,gthe equent financml yers T d opinion that amedmet as clarllcatory an curative in nat Terefo t he xt of RS5 L th i t s ep f bg hgd by 0 () t ven if te ament is stretched over eriod o ears the same woud not ecome cargeale to ta in an subsequent assessment yea ecome hareable once it is earne wether it is received or not th e eferred pament Wil not continue an it woul not be alar from serVIce neither a deferred ayment o salary no rrear ament of saary, Since the sceme ostulaes an on e ayment in consieration of voluntary retirement thoug te pament is eerred in five instaments Thereore i w yment of salay outSIde the scope of he haractestic canot b T cri n e thref eore E h py a p f y l b hb x y r An amount bs cg d h ince the employee was not in serVic ‘S e d y l d d a sy p f r a py l h pt e tim p d h h y df ll f t ‘ ould not be a pa r ection 10 10C) o th c. would ‘S ( f e At chanvged’ because of éfretching over- of ffie period of pqymenf ‘ 4 of dues under The scheme discussions hold ’rhaf salary or 22) On the basus of aforesaud discussions we beneflf In Ileu of salary payable 10 an employee op'rmg for ' volun‘rar‘y reflremenf Is chargeable To fax under Sec‘hon 15 I (a) as soon as I? became due Though noT paid The amounT So received is exempTed from being charged To Tax To The exTenT of Rs 5 00 000/ by The reason of Sec‘hon 1O (10C) of l The AcT Even If The paymenT Is sTreTched over a period of years The same would noT become chargeable To Tax