CHANDRA RANGANATHAN AND OTHERS V. COMMISSIONER OF INCOME TAX, CHENNAI.

CHANDRA RANGANATHAN AND OTHERS

                                      V.

COMMISSIONER OF INCOME TAX, CHENNAI.

in the Supreme Court, dated 21/10/2009

Judges: Altamas Kabir, Cyriac Joseph, JJ.

HEADNOTE:  The impugned order passed by the High Court is set aside and that of the Tribunal is restored.

JUDGEMENT: 1. Leave granted. These appeals are directed against the order passed by the Madras High Court in several tax appeal cases where the question involved was with regard to the deduction available to the appellants under Section 10(10-C) of the Income Tax Act, 1961.

2. The order of the Commissioner (Appeals)-IV, Chennai, relating to Assessment Year 2004-2005, was questioned before the Income Tax Appellate Tribunal, Chennai Bench, in ITA No. 986 (Mds) of 2007 and other connected appeals which were disposed of by the Tribunal upholding the claim for deduction made by the appellants. The same was the subject-matter of the tax appeal cases before the Bombay High Court, which refers to the order of the Appellate Tribunal on the basis of Letter F. No. 225/74/2005-ITA-II dated 20-10-2005, of the Central Board of Direct Taxes so far as Reserve Bank of India is concerned. The High Court held that having regard to the above letter of the Central Board of Direct Taxes, the amounts received by the employees of RBI opting for Optional Early Retirement Scheme do not qualify for deduction under Section 10(10-C) of the aforesaid Act.

3. During the course of hearing of these appeals, it was brought to our notice that by the subsequent Letter dated 8-5-2009, issued by the Central Board of Direct Taxes, it was indicated that the matter had been reviewed on the basis of the judgment of the Bombay High Court dated 4-7-2008 in CIT v. Koodathil Kallyatan Ambujakshan 2008 219 CTR 80 Bom and it was held that the amounts received by retiring employees of RBI would be eligible for exemption under the aforesaid provisions of the Income Tax Act. On behalf of the Union of India and the Commissioner of Income Tax, the respondent herein, it was submitted that in view of the said circular, the respondent would allow the benefit of deduction to the appellants under section 10(10-c) of the income tax act, 1961, as far as the retired employees of Reserve Bank of India are concerned.

4. Having regard to the above, the appeals succeed and are allowed. The impugned order passed by the High Court is set aside and that of the Tribunal is restored. There will be no order as to costs.


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