Bombay H.C : Where pursuant to circular issued by CBDT, assessee, an employee of RBI, filed revised return claiming refund of tax deducted at source by RBI at time of his opting for Optional Early Retirement Scheme, in view of fact that revenue did not contest said claim on merits, revised return so filed could not be dismissed on hyper technical ground of limitation

High Court Of Bombay

Devdas Rama Mangalore vs. CIT -26

Assessment Year : 2004-05

Section : 237, 10(10C), 119

Mohit S. Shah, C.J. And M.S. Sanklecha, J.

Writ Petition No. 2422 Of 2013

January 15, 2014

ORDER

1. Rule, returnable forthwith. By consent and at the request of the Counsel, the petition is taken up for final disposal.

2. This petition filed by a Senior Citizen challenges the order dated 4 February 2013 of the respondent revenue in dismissing the application for condonation of delay under Secrtion119(2)(b) of the Income Tax Act, 1961 (“the Act”) for claiming refund of tax paid. This application was filed by the petitioner seeking refund of tax deducted at source (TDS) by Reserve Bank of India (RBI) on the payment made to him in the year 2004 when he opted for the Optional Early Retirement Scheme (Scheme)

3. The RBI while making the payment to the petitioner under the Scheme had deducted as tax at source an amount of Rs.1,64,117/-. However, in his return of income for assessment year 2004-05 filed on 15 October 2004 the petitioner did not claim any refund of tax as TDS paid by RBI on his behalf nor was the credit on tax utilized to discharge tax payable on any other income.

4. It was only on 8 May 2009 that the Central Board of Direct Taxes (CBDT) issued a Circular clarifying that the employees of RBI who had opted for early retirement scheme during the year 2004-05 would be entitled for benefit of exemption under section 10(10C) of the Act. The Supreme Court also in Chandra Ranganathan v. CIT [2010] 326 ITR 49/195 Taxman 418/8 taxmann.com 126 held that the amounts received by retiring employees of Reserve Bank of India opting for the scheme are eligible for exemption under section 10(10C) of the Act. In view of the above the petitioner filed a revised return of income on 8 September 2011 claiming benefit of exemption available to the Scheme under section 10(10C) of the Act which consequently would result in refund of Rs.1.64 lacs paid by RBI as TDS. However, there was no response to the above revised return of income from the respondent-revenue.

5. The petitioner in the mean time also filed an application with the Commissioner of Income Tax under section 119(2) (b) of the Act seeking condonation of delay in filing his application for refund in the form of revised return of income for assessment year 2004-05. The respondent revenue by the impugned order dismissed the application under section 119(2)(b) of the Act on the ground that in view of Instruction No.13 of 2006 dated 22 December 2006 by the CBDT an application claiming refund cannot be entertained if the same is filed beyond the period of 6 years from the end of the assessment year from which the application is made. In the affidavit in reply dated 19 November 2013 the Commissioner of Income Tax states that he bound by the above instructions issued by the CBDT and consquently the claim for refund cannot be considered.

6. It is not disputed by the respondent revenue that on merits the petitioner is entitled to the benefit of refund of TDS as the payment received under the scheme is exempted under section 10(10C) of the Act. The decision of the Apex Court in the matter of Chandra Ranganathan (supra) concludes the issue. This is also the view of the revenue as clarified in CBDT Circular dated 8 May 2003. The application under section 119(2)(b) of the Act is being denied by adopting a very hyper technical view that the application for condonation of delay was made beyond 6 years from the date of the end of the assessment year 2004-05. In this case the revised return of income filed on 08 September 2011 should itself be considered as application for condonation of delay under section 119(2)(b) of the Act and refund granted.

7. It is to be noted that the respondent revenue does not dispute the claim of the petitioner for refund on merits but the same is being denied only on hyper technical view of limitation. It will be noted that on 8 May 2009 the CBDT issued a circular clarifying and reviewing its earlier decision to declare that the employees of RBI who opted for early retirement scheme under the Scheme will be entitled to the benefit of section 10(10C) of the Act. Soon after the issue of circular dated 8 May 2009 by the CBDT and the decision of the Apex Court in Chandra Ranganathan (supra) the petitioner filed a revised return of income on 08 September 2013 seeking refund of TDS paid on his behalf by RBI.

8. In the above view, we allow the petition and direct respondent-revenue to grant refund due to the petitioner.

9. The petition is allowed in the above terms. No order as to costs.

[Citation : 362 ITR 335]