Pankaj Bhupatrai Joshi Vs ITO (ITAT Ahmedabad)
ITAT Allows Full ₹10.15 Lakh Leave Encashment Exemption: ₹25 Lakh CBDT Limit Held Applicable
The Ahmedabad ITAT allowed full exemption of ₹10.15 lakh received towards leave encashment by a retired State Bank of India employee and held that the enhanced exemption limit of ₹25 lakh notified by CBDT applies while granting relief under Section 10(10AA)(ii).
The assessee had retired during FY 2019-20 and claimed exemption of ₹10,15,928 towards leave encashment. However, CPC while processing return under Section 143(1) restricted the exemption to ₹3 lakh on the ground that the assessee was not a Central or State Government employee. The CIT(A) also confirmed the adjustment.
Before the Tribunal, reliance was placed on CBDT Notification No. 31/2023 dated 24.05.2023 enhancing the exemption limit to ₹25 lakh and stating that no person would be adversely affected by giving retrospective effect to the notification. The Tribunal followed earlier Jaipur Bench and Ahmedabad Bench decisions including Govind Chhatwani and Goverdhan D. Bhambhani and observed that once the exemption limit stands revised to ₹25 lakh, eligible retiring employees are entitled to benefit of the enhanced limit.
Accordingly, the ITAT held that restricting exemption to ₹3 lakh was unsustainable and directed grant of full exemption claimed by the assessee under Section 10(10AA).
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
