Filing of Statement as Neither Employees entitled to ERS Nor Company has Obligation against Relief u/s 89: ITAT directs Re-adjudication [Read Order]

The Pune Bench of Income Tax Appellate Tribunal (ITAT) has directed the re-adjudication of the statement has been filed as neither the employees entitled to Early Retirement Scheme (ERS) nor the company had any obligation against the relief under Section 89 of the Income tax Act 1961.

The assessee, Anita Anil Rangale had been a salaried employee of Colgate Palmolive (India) Ltd., Aurangabad Unit. An Early Retirement Scheme (ERS) was formulated by the employer. The assessee was one of the employees opting for the ERS. He claimed relief under Section 89 of the Income-tax Act, 1961 in the return of income, without claiming exemption under Section 10(10C) of the Income Tax Act.

The Assessing Officer (AO) held that there was no termination of employment and the amount received by the assessee was compensation which was not a capital receipt. He, therefore, held it to be profits in lieu of salary as per section 17(3) and re-worked the amount of relief under Section 89 of the Income Tax Act. No succor was provided by the CIT(A).

Nikhil Pathak, on behalf of the assessee submitted that the proceedings before the AO had gone on the premise that the assessee opted for voluntary retirement, which was not thrust upon him.He placed on record a letter dated 06.10.2023 issued by the Colgate Palmolive (India) Ltd stating that the assessee and other employees were not entitled for the scheme nor was the company under any obligation under the same to the employees. It was submitted that this is important additional evidence which has bearing on the issue.

Neha Deshpande, appeared on behalf of the revenue.

A single Bench of R.S. Syal, (Vice President) allowed the appeal filed by the assessee and seaside the impugned order remitted the matter to the file of the AO with a direction to decide the issue afresh in the hue of the above additional evidence as per law after allowing a reasonable opportunity of hearing to the assessee.

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