The Exit Option Scheme did not meet the statutory requirements for exemption under Section 10(10C) of the Income Tax Act, leading to the disallowance of the claim.

JUDGMENT :

A.K. Jayasankaran Nambiar, J.

1. This Income Tax Appeal preferred by the assessee impugns the order dated 28.12.2023 of the Income Tax Appellate Tribunal, Cochin Bench in ITA No. 996/Coch/2012 & S.A. No. 89/Coch/2022, pertaining to the assessment year 2007-2008.

2. The brief facts necessary for the disposal of this Income Tax Appeal are as follows:

The assessee, who was an employee of the State Bank of Travancore during the year 2006-2007 relevant to the assessment year 2007-2008 opted for the Exit Option Scheme (E.O.S.) formulated by the employer. By way of the benefits under the E.O.S. she received an amount of Rs.10,25,690/- in that year. The assessee while filing a return of income for the assessment year 2007-2008, returned an income of Rs.7,37,250/-. The said return of income included income from salary as also income from house property. The return was processed under Section 143(1) and a refund (including interest thereon) of Rs.1,71,330/- was granted to the assessee.

3. It would appear that subsequently a revised return was filed by the assessee on 14.08.2008 returning an income of Rs.6,88,420/-. The revised return was processed under Section 143(1) and a demand of Rs.2,25,580/- was raised owing to non-allowance of credit for TDS. When the assessee then took up the matter with the Assessing Authority, the latter on verification of the returns filed by the assessee found that while processing the return initially the assessee's claim for exemption under Section 10(10C) of the Income Tax Act amounting to Rs.5,00,000/- had been allowed. Since the Assessing Authority found that no Voluntary Retirement Scheme as stipulated under Section 10 (10C) of the Income Tax Act had been framed by the State Bank of Travancore where the assessee was employed, and the exemption under Section 10(10C) had been wrongly allowed, he proceeded to re-open the case under Section 147 of the Income Tax Act by issuing a notice under Section 148 thereof. The proceedings that ensued resulted in a differential demand being made on the assessee consequent to dis-allowance of the claim for exemption under Section 10(10C).

4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the First Appellate Authority, which confirmed the order of the Assessing Officer. A further appeal preferred by the assessee before the Income Tax Appellate Tribunal culminated in the order impugned in this appeal, which dismissed the appeal preferred by the assessee. The assessee is now before us, raising the following substantial questions of law:

i) whether in the Learned Tribunal went wrong in disallowing exemption under Section 10(10C) of the Act?

ii) Has not the Learned Tribunal went wrong in disallowing the claim which was initially allowed in 2007 and later claimed in 2014?

iii) Is not the appellant entitled for exemption under Section 10(10C) of the Act?

5. We have heard the learned Senior counsel Sri. George A. Cherian, assisted by the learned counsel Smt. Latha Susan Cherian and Sri. Jose Joseph the learned standing counsel for the Income Tax Department.

6. On a consideration of the rival submissions, we find that the authorities below have clearly found, as a matter of fact, that the Clauses in the E.O.S framed by the State Bank of Travancore, and on the strength of which the assessee received the amount of Rs.10,25,690/- mentioned above, did not strictly conform to the mandate of Rule 2BA of the Income Tax Rules. The latter statutory provision clearly enumerates the conditions necessary for a Voluntary Retirement Scheme to qualify for the benefits envisaged under Section 10(10C) of the Income Tax Act. The distinguishing features in the E.O.S formulated by the State Bank of Travancore, which did not render it in conformity with the requirements of Rule 2BA of the Income Tax Rules, have been clearly brought out in the order of the Assessing Authority and read as follows:

"i) The objective of the "EOS" (Clause 1) was to provide an exi