Law:

Section:

Section 10(10C) of the Income-tax Act, 1961 - Voluntary retirement, payments on - Assessment year 2003-04 - Whether amendment to section 10(10C) with effect from 1-4-2004 is clarificatory and curative in nature - Held, yes - Whether amount received at time of voluntary retirement is exempted from being charged to tax to extent of Rs. 5 lakhs by reason of section 10(10C), even if payment is made in instalments to be paid in subsequent years - Held, yes Circulars & Notifications : Circular No. 7/2003, dated 5-9-2003 Interpretation of statute : Rule of purposive construction FACTS The assessee was an employee of company 'B'. The employer of the assessee had determined the ex-gratia amount of voluntary retirement at Rs. 7,13,513 and out of said amount only 1/5th was actually paid to the assessee in the relevant assessment year and the balance amount was to be paid in four instalments in the subsequent financial years. The assessee, however, claimed deduction of a total sum of Rs. 5 lakhs, the maximum limit for exemption as per section 10(10C). The Assessing Officer allowed exemption of Rs. 1,42,703 only which was the amount actually received by the assessee and added back rest of the amount of the ex-gratia payment claimed by the assessee. On appeal, the Commissioner (Appeals), by applying the prospective amendment to section 10(10C) with effect from 1-4-2004, retrospectively allowed the assessee's claim to the extent of Rs. 5 lakhs. On appeal, the Tribunal upheld the order of the Commissioner (Appeals). On appeal to the High Court, the revenue contended that since the assessee's case pertained to pre-amended period, he was entitled to exemption for the ex-gratia amount actually received, i.e., Rs. 1,42,703. HELD Section 10(10C ) was inserted in order to make voluntary retirement attractive so as to reduce human complements for securing economic viability of certain companies. 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. [Para 11] Section 15(a ) provides…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492