Case Law Details
Rajendra Kumar Vs ITO (ITAT Ranchi)
The ITAT Ranchi allowed the appeal of an assessee challenging the restriction of exemption under Section 10(10AA)(ii) of the Income-tax Act for leave encashment received on retirement. The assessee, a retired UCO Bank employee, had received leave encashment of ₹13,20,280 during the relevant financial year and claimed exemption for the entire amount in the return of income. However, while processing the return under Section 143(1), the Assessing Officer restricted the exemption to ₹3 lakh. The CIT(A) upheld the restriction on the ground that the assessee was not a Central or State Government employee and therefore was not entitled to exemption of the entire amount.
The appeal before the Tribunal was filed with a delay of 1,186 days. The assessee sought condonation of delay on the basis of CBDT Notification No. 31/2023 dated 24.05.2023, issued with retrospective effect, which increased the exemption limit to ₹25 lakh. The Department did not seriously oppose the request, and the Tribunal condoned the delay.
On merits, the assessee contended that in view of the CBDT notification and earlier Tribunal decisions, the entire leave encashment amount of ₹13,20,280 was exempt under Section 10(10AA)(ii). The Tribunal, following the decisions of its Coordinate Bench and the Jaipur Bench, held that the assessee was entitled to the benefit of deduction under Section 10(10AA)(ii). Accordingly, it allowed the claim and the appeal.
FULL TEXT OF THE ORDER OF ITAT RANCHI
1. This appeal by the assessee is directed against the order of the learned National Faceless Appeal Centre (NFAC), Delhi [in short, the ld. CIT(A)] dated 19/09/2022 for the Assessment Year (AY) 2020-21. The assessee has raised following grounds of appeal:
“1. Under the facts and circumstances of the case, the ld. CIT(A) NFAC has wrongly restricted the exemption under Section 10(10AA)(ii) of the Act to Rs. 300000/-against claimed and actual received by appellant as Leave Encashment on retirement Rs. 13,20,280/-.
2. That recently the CBDT has issued Notification No. 31/2023/F No. 200/3/2023-ITA-I dated 24/05/2023 with Retrospective Effect and thus in view of same appellant request for condonation of delay in filing of appeal and to allow the claim u/sec. 10(10AA)(ii) of the Act.
3. Any other matter with prior permission of the chair.”
2. We found from perusal of the record that there is delay of 1186 days in filing this appeal before this Tribunal. The ld. AR of the assessee regarding condonation of delay has stated that the CBDT has issued Notification No. 31/2023/F.No. 200/3/2023-ITA-I dated 24/05/2023 with retrospective effect and in view of the above notification of the CBDT, this appeal has been filed and thus the delay in filing appeal may be condoned.
3. The ld. Sr.DR, on the other hand, did not raise any serious objection and submitted that the Bench may take appropriate view as per law.
4. Considering the notification issued by the CBDT dated 24/05/2023 with retrospective effect, we condone the delay in filing appeal before this Tribunal.
5. Facts of the case, in brief, are that the assessee Shri Rajendra Kumar retired from the services of UCO bank in the F.Y. 2019-20 pertaining to the A.Y. 2020-21. After superannuating from the services, the assessee received a sum of Rs. 13,20,280/- as leave encashment in terms of Section 10(10AA) of the Income Tax Act, 1961 (in short, the Act). Accordingly, return of income was filed by the assessee claiming the whole of such amount of leave encashment under Section 10(10AA)(ii) of the Act. The assessment was made under Section 143(1) of the Act in which the Assessing Officer restricted maximum exemption up to Rs. 3.00 lacs under the above provisions.
6. Aggrieved by the order passed under Section 143(1) of the Act, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) vide the impugned order dated 19/09/2022, dismissed the appeal of the assessee on the ground that since the appellant is not an employee of Central or State Government, therefore, the assessee is not entitled to get exemption of the entire amount of Rs. 13,20,280/- as per provisions of Section 10(10AA)(ii) of the Act.
7. Aggrieved by the order of the ld. CIT(A), the assessee has filed present appeal before this Tribunal.
8. During the course of hearing before us, the ld. AR of the assessee submitted that the CBDT Notification dated 24/05/2023 has increased the limit up to Rs. 25.00 lacs w.e.f. 01/04/2023 and therefore, the assessee is entitled to get exemption of the entire amount of Rs. 13,20,280/- under Section 10(10AA)(ii) of the Act. The ld. AR also placed relied on the orders passed by this Tribunal and also the order passed by the ITAT, Jaipur wherein the leave encashment up to Rs. 25.00 lacs has been allowed to be exempted in view of the CBDT Notification.
9. On the other hand, the ld. Sr.DR supported the orders of the lower authorities.
10. We have considered the rival submissions and respectfully following the decisions of the Coordinate Bench of this Tribunal, we are also of the view that the assessee is entitled to get the benefit of the deduction under Section 10(10AA)(ii) of the Act. Accordingly, the claim of the assessee is allowed.
11. In the result, this appeal of the assessee is allowed.
Order pronounced in open court on 18/06/2026.
Author Bio
