OF THE COURT WAS DELIVERED BY K.RAVIRAJA PANDIAN,J The appeal is filed by the assessee against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, dated 27.06.2008 made in ITA No.2275/Mds/2007. The relevant assessment year is 2004-2005. 2. The facts as culled out from the statement of facts stated in the memorandum of appeal are as follows:-
The assessee was employed in the ICICI Bank, Chennai. He took voluntary retirement under the "Early Retirement Option" (ERO) floated by the ICICI Bank and ERO cash compensation of Rs.19,12,580/- was received by him. In the return filed for the assessment year 2004-05 declaring a total income of Rs.14,12,580/- the assessee claimed exemption under
Section 10(10C) of the Income Tax Act 1961 to the extent of Rs.5,00,000/- out of the compensation received under the above said scheme. Initially, the return was processed under Section 143(1) and a refund of Rs.2,46,429/- was granted. Later on, the case was taken up for scrutiny by issue of notice under Section 143(2) of the Income Tax Act 1961. The assessing officer denied the exemption of Rs.5,00,000/- claimed under
Section 10(10C) taking the view that the scheme of ERO of the ICICI Bank had not fulfilled the conditions (ii), (iii) and (iv) of Rule 2BA of the Income Tax Rules. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who allowed the appeal. Against that order, the Revenue preferred an appeal before the Income-tax Appellate Tribunal and the Income-tax Appellate Tribunal relying on the decision of this court in T.C.Nos.1458 to 1461of 2007 allowed the appeal ex parte without giving sufficient opportunity to the assessee. Aggrieved by the said order, the present appeal is filed by the assesseee by formulating the following substantial questions of law:-
1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in entertaining the Departmental appeal which is contrary to the Instruction No.2/2005 dt. 24.10.2005 issued by CBDT wherein the Department is precluded from filing an appeal, if the tax effect involved in the appeal is less than Rs.2 lakhs ?
2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the appellant was not entitled to exemption under
Section 10(10C) of the Income Tax Act 1961 in respect of the amount received under the Early Retirement Option of the ICICI Bank ?
3. We heard the arguments of the learned counsel for the appellant and perused the materials available on record.
4. In the case of Commissioner of Income Tax and Others Vs. M.Chelladurai and Others (317 ITR 370), this court after considering the scheme has held that the employees are not entitled to the benefit under
Section 10(10C) as the scheme is not in conformity with the Rule 2BA of the Income Tax Rules. However, in the case of Commissioner of Income Tax Vs. M.Arokiam and Another (317 ITR 381), the Division Bench of this court to which one of us (K.Raviraja Pandian,J.) was a party, while observing that as per the scheme the assessee is not entitled to the benefit under
Section 10(10C) of the Income Tax Act, has held as follows:-
"However, on a perusal of the assessment order in the present case, the tax effect in T.C.No.1099 of 2008 is Rs.1,49,913 and in T.C.No.1102 of 2008 is Rs.1,83,480, which is below the tax effect fixed in Instruction 1979 Circular F.No.279/126/98 ITJ dated March 27, 2000, wherein it has been stated that an appeal to the High Court could be filed by the Revenue only if the tax effect is more than Rs.2 lakhs. Similar issue has been considered by this court with reference to Circular F.No.279/126/98 ITJ dated March 27,2000 in T.C.No.222 of 2004 dated August 16, 2007 (CIT Vs. Associated Electrical Agencies (2007) 295 ITR 496) and rejected the appeal filed by the Revenue on the premise that not only the tax effect involved was below the sum fixed in the circular but also the other qualifications prescribed therein were also not available to carve out and bring the case outside the purview of the circular. In the present appeals also, not only the tax effect is less than the amount stated in the circular and the other exceptions prescribed were also not available. Hence, following the decision of this court dated August 16,2007, made in CIT Vs. Associated Electrical Agencies (2007) 295 ITR 496, T.C.No.222 of 2004, these appeals are dismissed. "
5. In the present appeal also, the tax effect is less than the amount stated in the circular and this aspect of the lower tax effect has not been taken into consideration by the Tribunal. Further, it could be seen that the order of the Tribunal is an ex-parte order. Hence, following the decision of this court in the case of Commissioner of Income Tax Vs. M.Arokiam and Another (317 ITR 381), the order of the Tribunal is set aside and the appeal is allowed.