My client took a lump sum from his employer's pension policy in lieu of his pensionary rights and joined another group. The Assessing Officer says s.10(10A) only applies on superannuation and that in any event the client never appealed the assessment, so a s.154 application is not open to him. Is there anything I can do?
On this Tribunal's view, yes on both counts. The ITAT Chandigarh held that section 10(10A) nowhere provides that the benefit accrues only on superannuation or retirement, so a lump sum received in lieu of pensionary benefit under a scheme formulated by the employer falls within s.10(10A)(ii); and it held that the refusal of a benefit admissible in law was a mistake apparent from the record which the Assessing Officer ought to have rectified under section 154, following coordinate-bench orders in the cases of other retirees of the same employer.
Decided by the ITAT (Rajpal Yadav, Vice President and Krinwant Sahay, Accountant Member (ITAT Chandigarh, Division Bench 'A')) on 2025-09-11, reported as ITA No. 97/CHD/2025, assessment year 2013-14 (Income Tax Appellate Tribunal, Chandigarh); date of hearing 29 July 2025, order pronounced 11 September 2025. It bears on section 10(10A), section 10(10A)(ii), section 154, section 143(3) of the Income Tax Act 1961, in Salary & Perquisites, Capital Gains Exemptions and Assessment & Scrutiny matters.
Two useful things come out of this order. The first is the construction point: the Assessing Officer had read a superannuation condition into s.10(10A)(ii) and the Tribunal said in terms that there is no legislative backing for it, adding that if a retired employee takes other employment that cannot prohibit him from claiming his pension. The second is procedural and travels well beyond this section. The assessee had not appealed the s.143(3) order at all; he learned only later, from coordinate-bench orders in the cases of other Ranbaxy retirees, that the claim was good, and moved under s.154. The Tribunal accepted that route, resting on CIT v K.N. Oil Industries (Madhya Pradesh High Court) for the propositions that the "record" for s.154 is not confined to the return and that an officer administering the Act has a duty to inform an assessee of a relief he is entitled to, on the Ahmedabad Bench's reliance on CBDT Circular No. 14(XL-35) of 1955, which has not been withdrawn, and on the Calcutta High Court's observation that what matters is whether the benefit is allowable in law, not whether it was claimed. Two cautions before this is used. It is a Tribunal order and the s.154 point is one on which there is a genuine contrary line — the Allahabad decisions in Anchor Pressings, Sharda Prasad and Paramount Trading, which the Madhya Pradesh High Court expressly disagreed with, are noted in the order itself as supporting the Department. And the order does not say which of the two fractions in s.10(10A)(ii) it applied; the exemption directed, Rs. 34,01,898, is exactly half of the Rs. 68,03,796 received, but the order nowhere records a finding on whether gratuity was received, so it should not be cited as authority on the one-third / one-half question.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee had been an employee of Ranbaxy Laboratories for 25 years. Under the company's Policy No. 32A he was entitled to pension as one of his retirement benefits, that policy applying to management employees who retired on completing ten years of company service or who retired after twenty years of continuous service; the management later formulated further policies numbered 32B, 32C and 32D. On retirement he received a lump sum of Rs. 68,03,796 in lieu of his pensionary claim. He filed his return for assessment year 2013-14 on 3 August 2013 declaring Rs. 1,38,06,938 and revised it on 16 August 2014 declaring Rs. 1,04,05,040, claiming exemption under s.10(10A) of Rs. 34,01,898. The Assessing Officer disallowed the claim in the order under s.143(3), taking the view that the payment was not a retirement benefit but a payment on extinguishment of employment and other benefits, and that the assessee had joined a subsequent group so that there was no termination of the employer-employee relationship. The assessee did not appeal that order. On learning of orders of the ITAT Chandigarh in the cases of Shri Anil Suri and Shri Dharam Singh Rawat, who had also retired from Ranbaxy Laboratories and had obtained the same benefit, he applied under s.154. The Assessing Officer dismissed the application and the Commissioner (Appeals) gave no relief by order dated 20 November 2024.
The appeal was allowed. Section 10(10A) nowhere provides that the benefit accrues only on superannuation or retirement; a lump sum received in lieu of pensionary benefit under a scheme formulated by the employer falls within s.10(10A)(ii) as a payment in commutation of pension received under any scheme of any other employer, and there is no other restriction, so the assessee was entitled to the exemption (para 7). The denial of that benefit was a mistake apparent from the record, and the s.154 application ought to have been allowed by the Assessing Officer after following the Tribunal's orders in the cases of similarly situated employees (para 7.3). The Assessing Officer was directed to grant the exemption of Rs. 34,01,898 (para 7.3).
The Tribunal set out the relevant part of s.10(10A) and accepted the assessee's submission that the only precondition the clause contemplates is that a commutation of pension should take place, the superannuation requirement having been introduced by the Assessing Officer without legislative backing (paras 6 and 6.1); the Departmental Representative was unable to controvert the proposition laid down in the coordinate-bench orders and argued only that the assessee ought to have appealed rather than moved under s.154 (para 6.2). On the merits the Tribunal held that a perusal of the section reveals no confinement to superannuation or retirement (para 7). On the rectification question it restated the settled limit of s.154 — an obvious and patent mistake apparent from the record, not one requiring a long-drawn process of reasoning on which there may conceivably be two opinions — and then relied on CIT v K.N. Oil Industries, 142 ITR 13 (Madhya Pradesh), which disagreed with the Allahabad line in Anchor Pressings, Sharda Prasad and Paramount Trading and agreed with the Gujarat High Court in Chokshi Metal Refinery that the record for s.154 is not confined to the return and that a relief apparent from the assessment record can be rectified although not claimed in the return (para 7.1). It added the Ahmedabad Bench's reliance in Kiritkumar Hiralal Doriwala on CBDT Circular No. 14(XL-35) of 1955, which has not been withdrawn and requires officers to draw an assessee's attention to a refund or relief he is entitled to, and the Calcutta High Court's observation in South Eastern Railway Employees Co-op Credit Society that what matters is whether the benefit is allowable in law (para 7.2). Finally it rejected the Assessing Officer's reasoning that the payment was not a retirement benefit and that later employment defeated the claim: the assessee's services with Ranbaxy came to an end, he retired, and he received the amount in lieu of his pensionary rights (para 7.3).
If assessee has received lumpsum payment in lieu of pensionary benefit under the Scheme formulated by the employer, then that would fall u/s 10(10A)(ii) i.e. payment in commutation of pension received under any scheme of any other employer to the extent it does not exceed. So, there was no other restriction.
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Handle my notice → Ask a CA on WhatsAppOn this Tribunal's view, yes on both counts. The ITAT Chandigarh held that section 10(10A) nowhere provides that the benefit accrues only on superannuation or retirement, so a lump sum received in lieu of pensionary benefit under a scheme formulated by the employer falls within s.10(10A)(ii); and it held that the refusal of a benefit admissible in law was a mistake apparent from the record which the Assessing Officer ought to have rectified under section 154, following coordinate-bench orders in the cases of other retirees of the same employer. This was decided by the ITAT (Rajpal Yadav, Vice President and Krinwant Sahay, Accountant Member (ITAT Chandigarh, Division Bench 'A')) and bears on section 10(10A), section 10(10A)(ii), section 154, section 143(3) of the Income Tax Act 1961. It is reported as ITA No. 97/CHD/2025, assessment year 2013-14 (Income Tax Appellate Tribunal, Chandigarh); date of hearing 29 July 2025, order pronounced 11 September 2025. Two useful things come out of this order. The first is the construction point: the Assessing Officer had read a superannuation condition into s.10(10A)(ii) and the Tribunal said in terms that there is no legislative backing for it, adding that if a retired employee takes other employment that cannot prohibit him from claiming his pension. The second is procedural and travels well beyond this section. The assessee had not appealed the s.143(3) order at all; he learned only later, from coordinate-bench orders in the cases of other Ranbaxy retirees, that the claim was good, and moved under s.154. The Tribunal accepted that route, resting on CIT v K.N. Oil Industries (Madhya Pradesh High Court) for the propositions that the "record" for s.154 is not confined to the return and that an officer administering the Act has a duty to inform an assessee of a relief he is entitled to, on the Ahmedabad Bench's reliance on CBDT Circular No. 14(XL-35) of 1955, which has not been withdrawn, and on the Calcutta High Court's observation that what matters is whether the benefit is allowable in law, not whether it was claimed. Two cautions before this is used. It is a Tribunal order and the s.154 point is one on which there is a genuine contrary line — the Allahabad decisions in Anchor Pressings, Sharda Prasad and Paramount Trading, which the Madhya Pradesh High Court expressly disagreed with, are noted in the order itself as supporting the Department. And the order does not say which of the two fractions in s.10(10A)(ii) it applied; the exemption directed, Rs. 34,01,898, is exactly half of the Rs. 68,03,796 received, but the order nowhere records a finding on whether gratuity was received, so it should not be cited as authority on the one-third / one-half question. If it applies to you, the first step is this: If the Assessing Officer reads a superannuation or retirement precondition into s.10(10A)(ii), put paragraph 7 of this order to him — the clause "nowhere provides that benefit would only accrue to the assessee on superannuation/retirement".
The assessee had been an employee of Ranbaxy Laboratories for 25 years. Under the company's Policy No. 32A he was entitled to pension as one of his retirement benefits, that policy applying to management employees who retired on completing ten years of company service or who retired after twenty years of continuous service; the management later formulated further policies numbered 32B, 32C and 32D. On retirement he received a lump sum of Rs. 68,03,796 in lieu of his pensionary claim. He filed his return for assessment year 2013-14 on 3 August 2013 declaring Rs. 1,38,06,938 and revised it on 16 August 2014 declaring Rs. 1,04,05,040, claiming exemption under s.10(10A) of Rs. 34,01,898. The Assessing Officer disallowed the claim in the order under s.143(3), taking the view that the payment was not a retirement benefit but a payment on extinguishment of employment and other benefits, and that the assessee had joined a subsequent group so that there was no termination of the employer-employee relationship. The assessee did not appeal that order. On learning of orders of the ITAT Chandigarh in the cases of Shri Anil Suri and Shri Dharam Singh Rawat, who had also retired from Ranbaxy Laboratories and had obtained the same benefit, he applied under s.154. The Assessing Officer dismissed the application and the Commissioner (Appeals) gave no relief by order dated 20 November 2024. The matter was decided on 2025-09-11 by the ITAT (Rajpal Yadav, Vice President and Krinwant Sahay, Accountant Member (ITAT Chandigarh, Division Bench 'A')). On those facts the ITAT held as follows. The appeal was allowed. Section 10(10A) nowhere provides that the benefit accrues only on superannuation or retirement; a lump sum received in lieu of pensionary benefit under a scheme formulated by the employer falls within s.10(10A)(ii) as a payment in commutation of pension received under any scheme of any other employer, and there is no other restriction, so the assessee was entitled to the exemption (para 7). The denial of that benefit was a mistake apparent from the record, and the s.154 application ought to have been allowed by the Assessing Officer after following the Tribunal's orders in the cases of similarly situated employees (para 7.3). The Assessing Officer was directed to grant the exemption of Rs. 34,01,898 (para 7.3).
The Tribunal set out the relevant part of s.10(10A) and accepted the assessee's submission that the only precondition the clause contemplates is that a commutation of pension should take place, the superannuation requirement having been introduced by the Assessing Officer without legislative backing (paras 6 and 6.1); the Departmental Representative was unable to controvert the proposition laid down in the coordinate-bench orders and argued only that the assessee ought to have appealed rather than moved under s.154 (para 6.2). On the merits the Tribunal held that a perusal of the section reveals no confinement to superannuation or retirement (para 7). On the rectification question it restated the settled limit of s.154 — an obvious and patent mistake apparent from the record, not one requiring a long-drawn process of reasoning on which there may conceivably be two opinions — and then relied on CIT v K.N. Oil Industries, 142 ITR 13 (Madhya Pradesh), which disagreed with the Allahabad line in Anchor Pressings, Sharda Prasad and Paramount Trading and agreed with the Gujarat High Court in Chokshi Metal Refinery that the record for s.154 is not confined to the return and that a relief apparent from the assessment record can be rectified although not claimed in the return (para 7.1). It added the Ahmedabad Bench's reliance in Kiritkumar Hiralal Doriwala on CBDT Circular No. 14(XL-35) of 1955, which has not been withdrawn and requires officers to draw an assessee's attention to a refund or relief he is entitled to, and the Calcutta High Court's observation in South Eastern Railway Employees Co-op Credit Society that what matters is whether the benefit is allowable in law (para 7.2). Finally it rejected the Assessing Officer's reasoning that the payment was not a retirement benefit and that later employment defeated the claim: the assessee's services with Ranbaxy came to an end, he retired, and he received the amount in lieu of his pensionary rights (para 7.3). In the words reproduced by the source cited on this page: "If assessee has received lumpsum payment in lieu of pensionary benefit under the Scheme formulated by the employer, then that would fall u/s 10(10A)(ii) i.e. payment in commutation of pension received under any scheme of any other employer to the extent it does not exceed. So, there was no other restriction." The decision followed or applied CIT v. K.N. Oil Industries, 142 ITR 13 (Madhya Pradesh) — relied upon and quoted at length; Chokshi Metal Refinery v. CIT [1977] 107 ITR 63 (Gujarat) — approved through the K.N. Oil Industries extract; Kiritkumar Hiralal Doriwala v. Wealth-tax Officer, 107 TTJ 31 (ITAT Ahmedabad) — relied upon; CIT, Kolkata v. South Eastern Railway Employees Co-op Credit Society Ltd., 73 taxmann.com 123 (Calcutta) — relied upon; ITA 127/CHD/2019 and ITA 870 to 872/CHD/2018 (Anil Suri and Dharam Singh Rawat, ITAT Chandigarh) — coordinate-bench orders followed; Anchor Pressings (P.) Ltd. v. CIT [1975] 100 ITR 347 (Allahabad), Sharda Prasad v. CIT [1975] 100 ITR 373 (Allahabad) and Paramount Trading Corporation v. ITO [1980] 124 ITR 55 (Allahabad) — recorded in the K.N. Oil Industries extract as the contrary line, disagreed with there.
It was decided by the ITAT on 2025-09-11 and is reported as ITA No. 97/CHD/2025, assessment year 2013-14 (Income Tax Appellate Tribunal, Chandigarh); date of hearing 29 July 2025, order pronounced 11 September 2025. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 10(10A), section 10(10A)(ii), section 154, section 143(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed. Section 10(10A) nowhere provides that the benefit accrues only on superannuation or retirement; a lump sum received in lieu of pensionary benefit under a scheme formulated by the employer falls within s.10(10A)(ii) as a payment in commutation of pension received under any scheme of any other employer, and there is no other restriction, so the assessee was entitled to the exemption (para 7). The denial of that benefit was a mistake apparent from the record, and the s.154 application ought to have been allowed by the Assessing Officer after following the Tribunal's orders in the cases of similarly situated employees (para 7.3). The Assessing Officer was directed to grant the exemption of Rs. 34,01,898 (para 7.3). It arises in Salary & Perquisites, Capital Gains Exemptions and Assessment & Scrutiny matters, on section 10(10A), section 10(10A)(ii), section 154, section 143(3) of the Income Tax Act 1961, and was decided by Rajpal Yadav, Vice President and Krinwant Sahay, Accountant Member (ITAT Chandigarh, Division Bench 'A'). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Establish that the payment was under a scheme formulated by the employer and was in lieu of pensionary rights, and get the policy or scheme document on the file; that is what the Tribunal turned on. Do not concede that later employment defeats the claim. The Tribunal rejected that reasoning expressly in paragraph 7.3. Where the claim was never made and the assessment was not appealed, consider s.154 rather than giving up, and build the application on K.N. Oil Industries and CBDT Circular No. 14(XL-35) of 1955 — but be ready for the Allahabad line the order itself records as being against you. Look for coordinate-bench orders in the cases of colleagues from the same employer and the same scheme; that is what carried this appeal, and the Departmental Representative was unable to controvert the proposition they laid down. Still compute the exemption limb by limb under s.10(10A)(ii) — one-third if any gratuity was received, one-half otherwise, on the commuted value. This order decides the entitlement, not the fraction.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator returns nothing and a search pairing the assessee with s.10(10A) returns only this order. The holding that the exemption is not confined to a lump sum received on superannuation has not been followed or questioned, and no appeal to the Punjab and Haryana High Court was traced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs from paragraph 1 to paragraph 8, with sub-paragraphs 5.1, 6.1, 6.2, 7.1, 7.2 and 7.3; paragraph 8 is the disposal ("In the result, appeal of the assessee is allowed"), followed by the signatures of both Members. Paragraphs 7.1 and 7.2 consist largely of passages quoted from CIT v K.N. Oil Industries and from CIT v South Eastern Railway Employees Co-op Credit Society Ltd.; those are not this Tribunal's own words and are not attributed to it here. The key quote is from paragraph 7. Text problems in the report, recorded rather than resolved: the order's reproduction of s.10(10A)(ii) labels the second sub-clause "(h)" where the statute reads "(b)", which is plainly a transcription error; the coram is printed as "Shri Rajpal Yadav, Vice President" in the header, "PER RAJ PAL YADAV, VP" at the start of the order and "(RAJPAL YADAV)" in the signature block. Paragraph 7.2's quotation from the Calcutta High Court is visibly corrupt ("This was new the plea", "renders even.7 pose his due", "in d affirmative") and none of it has been used. The order refers to the Madhya Pradesh High Court as "the Hon'ble jurisdictional High Court" in paragraph 7.2, which for a Chandigarh Bench is not obviously right; it is recorded without being adopted. The order gives no citation for the coordinate-bench decisions beyond "ITA 127/CHD/2019 and ITA 870 to 872/CHD/2018 in the case of Shri Anil Suri and Shri Dharam Singh Rawat"; those orders have not been read, and nothing is said here about what they held beyond what this order records. Two limits on what the order establishes. It does not record whether the assessee received gratuity, so it makes no finding on the one-third or one-half question in s.10(10A)(ii), and none is attributed to it here; the sum directed to be exempted, Rs. 34,01,898, is exactly half of the Rs. 68,03,796 received, but the order gives no reasoning for the fraction and should not be cited on it. And the s.154 holding is the part most likely to be resisted: the assessment under s.143(3) had never been appealed, the mistake relied on emerged only from later coordinate-bench orders, and whether that is a mistake apparent from the record is a question on which there is a contrary line. Whether this order has itself been appealed or followed has not been checked; see the validity note. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed. Section 10(10A) nowhere provides that the benefit accrues only on superannuation or retirement; a lump sum received in lieu of pensionary benefit under a scheme formulated by the employer falls within s.10(10A)(ii) as a payment in commutation of pension received under any scheme of any other employer, and there is no other restriction, so the assessee was entitled to the exemption (para 7). The denial of that benefit was a mistake apparent from the record, and the s.154 application ought to have been allowed by the Assessing Officer after following the Tribunal's orders in the cases of similarly situated employees (para 7.3). The Assessing Officer was directed to grant the exemption of Rs. 34,01,898 (para 7.3).
TaxSphere, “Arun Dhir v DCIT — s.10(10A) contains no requirement that the commutation be received on superannuation, and the denial of a plainly available exemption is a mistake apparent from the record under s.154”, https://taxnotice.vittsphere.com/caselaw/case/arun-dhir-v-dcit-10-10a-lump-sum-in-lieu-of-pension-not-confined-to-superannuation/ (validity last checked 2026-09-09)
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My client has commuted part of his pension from a private employer's scheme and received a lump sum. How much of it is exempt, and does it make any difference that he also drew gratuity?
My client received a payment from a former employer that is not gratuity, not retrenchment compensation and not under any VRS. The Assessing Officer says it is profits in lieu of salary. What exactly does s.17(3) cover, and what does it not?
The Assessing Officer has issued a section 154 notice to rectify my section 143(1)(a) intimation after a scrutiny notice under section 143(2) was already served. Can he do that?
My capital gain arose after 15 March, so I could not have paid advance tax on it in any instalment. The Assessing Officer has charged s.234C interest from the first instalment date. Can he?
