Exemption u/s 10(10C) – Amount received under early retirement option scheme of bank – Exemption not claimed in return but later in representation to Principal Commissioner on basis of Supreme Court ruling in case of another employee – That exemption not claimed in return of income not material – Assessee entitled to benefit of exemption

Exemption u/s 10(10C) – Amount received under early retirement option scheme of bank – Exemption not claimed in return but later in representation to Principal Commissioner on basis of Supreme Court ruling in case of another employee – That exemption not claimed in return of income not material – Assessee entitled to benefit of exemption

The assessee was a bank employee and opted for the scheme of early retirement declared by the bank. In his return of income for the A.Y. 2004-05, he did not claim the benefit of exemption u/s 10(10C) on the amount received under the early retirement option scheme. Thereafter, relying on the dictum of the Supreme Court in the case of a similarly situated employee of the same bank, to the effect that the employee was entitled to the exemption u/s 10(10C), the assessee filed applications before the Principal Commissioner and claimed exemption u/s 10(10C) under the scheme. The Principal Commissioner was of the view that the assessee, unlike in the case before the Supreme Court, had not claimed such deduction in his return, and secondly, the assessee was expected to file a revision application u/s 264 and not file a representation in that regard. Therefore, he rejected the claim of the assessee.

The Gujarat High Court allowed the writ petition filed by the assessee and held as under:

‘i) On the facts, the assessee was entitled to the exemption u/s 10(10C) for the amount received from his employer bank at the time of his voluntary retirement under the early retirement option scheme. Even if the assessee had not claimed the exemption in his return of income for the A.Y. 2004-05, he could claim it at a later point of time. The orders passed by the Principal Commissioner rejecting the benefit of exemption u/s 10(10C) are set aside.

ii) It is declared that the writ applicant is entitled to claim exemption u/s 10(10C) for the amount of Rs. 5,00,000 received from the ICICI Bank Ltd. at the time of his voluntary retirement under the scheme in accordance with the law. It is clarified that this order has been passed in the peculiar facts of the case and shall not be cited as a precedent.’