Refund: Section 237: A. Y. 2004-05: Belated revised return filed on 08-09-2011 claiming refund on basis of CBDT Circular dated 08- 05-2009: Condonation of delay: Delay to be condoned:

The petitioner, who was an employee of RBI had opted for the Optional Early Retirement Scheme and had received an amount as per the Scheme in the year 2004. The RBI had deducted TDS of Rs. 1,64,117/- treating the said payment as taxable. In the return of income for the A. Y. 2004-05 filed on 15th October 2004 the petitioner did not claim any refund of tax as TDS paid by RBI on his behalf nor was the credit on tax utilised to discharge tax payable on any other income.

On 08-05-2009, CBDT issued a Circular clarifying that the employees of RBI who had opted for early retirement scheme during the year 2004-05 would be entitled for benefit of exemption u/s. 10(10C) of the Income-tax Act, 1961. The Supreme Court also in Chandra Ranganathan and Ors. vs. CIT; (2010) 326 ITR 49 (SC) held that the amounts received by retiring employees of RBI opting for the scheme are eligible for exemption u/s. 10(10C) of the Act. In view of the above, the petitioner filed a revised return of income on 08-11-2011 claiming benefit of exemption available to the Scheme u/s. 10(10C) of the Act which consequently would result in refund of Rs.1.64 lakh paid by RBI as TDS. However, there was no response to the above revised return of income from the respondent-revenue. The petitioner in the meantime, also, filed an application with the CIT u/s. 119(2) (b) of the Act seeking condonation of delay in filing his application for refund in the form of revised return of income for A. Y. 2004-05. The CIT by an order dated 04-02-2013 dismissed the application u/s. 119(2)(b) of the Act on the ground that in view of Instruction No. 13 of 2006 dated 22nd December, 2006 by the CBDT an application claiming refund cannot be entertained if the same is filed beyond the period of 6 years from the end of the assessment year for which the application is made. In the affidavit in reply dated 19th November 2013 the Commissioner of Income Tax states that he is bound by the above instructions issued by the CBDT and consequently the claim for refund cannot be considered.

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

“i) It is not disputed by the respondent revenue that on merits the petitioner is entitled to the benefit of refund of TDS as the payment received under the scheme is exempted u/s. 10(10C) of the Act. The decision of the Apex Court in the matter of Chandra Ranganathan and Ors. (supra) concludes the issue. This is also the view of the revenue as clarified in CBDT Circular dated 8th May, 2009. The application u/s. 119(2)(b) of the Act is being denied by adopting a very hypertechnical view that the application for condonation of delay was made beyond 6 years from the date of the end of the A. Y. 2004-05. In this case, the revised return of income filed on 8th September, 2011 should itself be considered as application for condonation of delay u/s. 119(2)(b) of the Act and refund granted.

ii) It is to be noted that the respondent revenue does not dispute the claim of the petitioner for refund on merits but the same is being denied only on hypertechnical view of limitation. It will be noted that on 8th May, 2009 the CBDT issued a circular clarifying and reviewing its earlier decision to declare that the employees of RBI who opted for early retirement scheme under the Scheme will be entitled to the benefit of section 10(10C) of the Act. Soon after the issue of circular dated 8th May, 2009 by the CBDT and the decision of the Apex Court in Chandra Ranganathan (supra) the petitioner filed a revised return of income on 8th September, 2011 seeking refund of TDS paid on his behalf by RBI.

iii) In the above view, we allow the petition and direct respondent-revenue to grant refund due to the petitioner.”