(Judgment 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 'C' Bench, Chennai, dated 13.6.2008 passed in ITA No.2403/Mds/2007 relating to the assessment year 2004-2005. The appeal is admitted on the following questions of law:
1. Whether the Income Tax Tribunal is right in law in entertaining the appeal filed by the department, when the tax effect in the present case was only Rs.1,36,650/- having regard to the relevant instructions of the CBDT, prescribing monitory limits for filing of appeals by the department ?
2. Whether on the facts and in the circumstances of the case, the Income Tax 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 OERS of the Reserve Bank of India ?
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 Reserve Bank of India. He took voluntary retirement under the Optional Early Retirement Scheme (OERS) framed by the Reserve Bank of India. In the return filed for the assessment year 2004-05 declaring a total income of Rs.9,86,423/- 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 said scheme. Initially, the return was processed under Section 143(1) on 4.5.2005. 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 OERS of the Reserve Bank of India had not fulfilled the conditions (ii), (iii) and (iv) of Rule 2BA. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who following the decision of the of the Mumbai Bench of the Income Tax Appellate Tribunal in ITA No.6384/Mds/2006 in the case of Vaishali A.Shelar, allowed the appeal and directed the assessing officer to grant exemption under
Section 10(10C) as claimed by the assessee. 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 1461 of 2007 allowed the appeal. Aggrieved by the said order, the present appeal is filed by the assessee on the questions of law referred to above.
3. The learned counsel for the assessee as well as the Revenue submitted that the issue is now squarely covered by the judgment of the Supreme Court made in Civil Appeal Nos.6997 to 7002 of 2009 (Chandra Ranganathan and Others Vs. Commissioner of Income Tax, Chennai) dated 21.10.2009. It has also taken note of the Circular issued by the C.B.D.T. In the said judgment the Supreme Court has observed as follows:-
"During the course of hearing of these appeals, it was brought to our notice that by the subsequent letter dated 8th May 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 4th July 2008 in the cae of Commissioner of Income Tax Vs. Koodathil Kallyatan (2008)219 CTR (Bom)80 2008 12 DTR 138 and it was held that amounts received by retiring employees of the 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(10C) of the Income Tax Act 1961 as far as the retired employees of the Reserve Bank of India are concerned."
4. The circular of the C.B.D.T reads as follows:-
"It has now been brought to the notice of the Board that the Hon'ble High Court of Bombay vide its order dated 4th July 2008 in the case of Commissioner of Income Tax Vs. Koodathil Kallyatan Ambujakshan (2008 219 CTR (Bom) 80 has held that Optional Early Retirement Scheme of RBI satisfies all the conditions of Rule 2BA and amounts received by retiring employees thereunder were eligible for exemption under
Section 10(10C). That judgment has become final.
3. The matter has therefore been reviewed in the Board in view of the aforesaid order of the Hon 'ble High Court of Bombay and it has been decided that the employees of RBI who accepted OERS would be entitled for the benefit of
Section 10(10C) of Income Tax Act, 1961."
5. In view of the above, the order of the Tribunal is set aside and the appeal is allowed answering the questions of law in favour of the assessee. The assessee is entitled to the benefit of deduction under
Section 10(10C) of the Income Tax Act.