Arvind Kumar Jolly Vs ITO (ITAT Chandigarh)
ITAT Chandigarh: ₹25 Lakh Leave Encashment Limit Held Prospective – PSU Retiree Restricted to ₹3 Lakh Exemption
Assessee, a retired employee of Union Bank of India (PSU), received ₹9,56,280 as leave encashment upon superannuation. He claimed the entire amount as exempt u/s 10(10AA), but CPC, Bengaluru, restricted the exemption to ₹3,00,000 under Section 10(10AA)(ii) applicable to non-government employees. CIT(A) dismissed the appeal ex parte, holding that the enhanced limit of ₹25 lakh notified on 24.05.2023 was not applicable to retirees of earlier years.
Assessee’s Arguments
- Claimed that the CBDT Notification No.31/2023 dated 24.05.2023, enhancing the limit to ₹25 lakh, should be treated as beneficial & retrospective, since it sought to correct an outdated limit fixed in 2002.
- Cited various ITAT decisions – Ram Charan Gupta (Jaipur), Vijay Kumar Jain (Agra), Devendra Singh Bhaskar (Ahmedabad), Satishchandra Hiralal Berawala (Ahmedabad) – which extended the benefit of the enhanced limit by applying a liberal interpretation in favour of retirees.
- Argued that delay in issuing the notification should not deprive earlier retirees of legitimate relief.
Revenue’s Stand
- PSU employees fall strictly under Section 10(10AA)(ii) & are entitled only to the notified monetary ceiling applicable to non-Government employees.
- Relied on Delhi High Court decision in Kamal Kumar Kalia v. UOI upholding the classification between Government & PSU employees & confirming that the enhanced limit is prospective, not retrospective.
Tribunal’s Findings/Decision
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