QUESTION: VRS payments are entitled to deduction under Sec. 10(10C). Where the excess of payment over the amount allowed as a deduction is taxable, the request for spread-over relief under Sec. 89 is continued to be denied though courts have uniformly conceded the claim. What is the remedy?
ANSWER: The law has undergone a change in view of a proviso inserted under Sec. 89 by the Finance (No.2) Act, 2009, with effect from April 1, 2010, so that from assessment year (AY) 2010-11, voluntary retirees from service will not be entitled to spread-over relief for that part of VRS amount, which is taxable.
This amendment would itself mean that such relief could not be denied for AY 2009-10 and earlier years apart from decisions of the High Courts referred by the reader.
This development of law may be pointed out to the assessing officer himself failing which by way of reference under Sec. 144A to the Joint Commissioner for interference in respect of assessments, if they are pending.
If relief is refused, the only remedy is by way of appeal which should now succeed for years prior to AY 2010-11 due to the development in law.
A revision petition to the Commissioner under Sec. 264 should also be efficacious but an appeal is preferable because an adverse decision against the taxpayer in appeal can be taken in further appeal to the Income Tax Appellate Tribunal, while there is no right of appeal against an adverse order of revision under Sec. 264 except by way of writ petition, which may, however, be possible in such patent cases of non-exercise of revisional jurisdiction judicially.
