CONSTITUTION OF INDIA, 1950

Article 226

Writ - Entitled to claim deduction under section 10(10C)(viii) and also under section 89(1) - Amounts received as part of VRS -

Assessee had received certain amounts from his employer under a Voluntary Retirement Scheme and claimed deduction under section 10(10C)(viii) as well as under the provisions of section 89(1). AO appeared to have initiated proceedings on the premise that assessee was not entitled to claim deduction under section 10(10C)(viii) and also under section 89(1) in respect of amounts received as part of VRS. Assessee under section 264, sought revision of orders/intimations through which relief under section 89(1) was denied to him. This Court in decision reported as State Bank of India v. Central Board of Direct Taxes 2006 (1) KLT 258 held that amounts received by employees under a VRS were entitled to relief under section 89 (1) in addition to the exemption granted under section 10(10C)(viii) and quashed letter/Circular No.E.174/5/2001-ITA-I, dated 23-04-2001 issued by CBDT. Held: It was not disputed that the instructions/letter of CBDT was quashed by this Court in State Bank of India [2006 TaxPub(DT) 1075 (Ker-HC)]. Still further, the High Court has categorically declared that amounts received by an employee under a VRS Scheme were entitled to deduction under section 10(10C)(viii) and relief under section 89(1) simultaneously. That being the position entire proceedings initiated against the petitioner becomes one without jurisdiction and relief should be granted when proceedings were without jurisdiction. Thus, assessee was entitled to claim deduction under section 10(10C)(viii) and relief under section 89(1) in respect of amounts received by him under the Voluntary Retirement Scheme (VRS).