Case Law Details
Shri Devendra Kumar Gupta Vs CIT (ITAT Jaipur)
ITAT Jaipur held that 100% exemption u/s. 10(10AA) denied as employees of Public Sector Undertaking (PSU) and Nationalized Banks or other Institutions which are classified as ‘State’ cannot be assumed the status of Central Government and State Government employees.
Facts- The appellant who has retired is an employee of Ajmer Vidyut Vitran Nigam Ltd. and had claimed an amount being leave encashment received as exempt u/s. 10(10AA) of the Act. However, the AO, CPC while processing the return of income has allowed of only Rs. 3,00,000/- as against 100% exemption claimed by the appellant.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Relying upon the decision of Hon’ble Delhi High Court in the case of Kamal Kumar Kalia vs. Union of India (2020) 268 Taxman 398 (Delhi) dated 08.11.2019 wherein the Hon’ble High Court while dealing with the identical issue had held that employees of Public Sector Undertaking (PSU) and Nationalized Banks or other Institutions which are classified as ‘State’ cannot be assumed the status of Central Government and State Government employees and the said decision was also followed by the Coordinate Bench of ITAT Bangalore in the case of KPTCL Davangere vs. ITO, 170 ITD 587 (Bang.)(Trib.) and the ld. CIT (A) while rightly following the aforementioned order, had dismissed the appeal of the assessee. No contrary decision has been placed on record before me in order to contradict the well reasoned findings recorded by the ld. CIT (A). Therefore, I see no reason to interfere with or to deviate from the well reasoned findings recorded by the ld. CIT (A). The appeal filed by the assessee stands dismissed.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal by the assessee is directed against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 27.12.2022 for the assessment year 2020-21. The assessee has raised the following grounds of appeal :-
1. That the ld. CIT (A) NFAC has without appreciating the facts has restricted the claim under section 10(100AA)(ii) upto Rs. 3,00,000/- (Against actual receipt of Rs. 12,09,600/- as employee of M/s. Ajmer Vidyut Vitran Nigam Ltd., Ajmer (A Rajasthan State government Employee).
2. Any other matter with prior permission of the Chair.
2. The brief facts of the case are that the appellant who has retired is an employee of M/s. Ajmer Vidhyut Vitran Nigam Ltd. and has claimed an amount of 12,09,600/- being leave encashment received as exempt under section 10(10AA) of the IT Act. However, the AO, CPC while processing the return of income has allowed exemption of only Rs. 3,00,000/- as against 100% exemption claimed by the appellant. Aggrieved by the order of AO, CPC, the assessee preferred appeal before ld. CIT (A), who also dismissed the appeal of the assessee taking into consideration the judgment of Hon’ble Delhi High Court in the case of Kamal Kumar Kalia vs. Union of India (2020) 268 Taxman 398 (Delhi HC).
3. Now the assessee is in appeal before the Tribunal.
4. At the time of hearing, none appeared on behalf of the assessee, therefore, vide order sheet dated 03.05.2023 the application for seeking adjournment was rejected and the matter was heard in the open court.
5. I have heard the ld. D/R, perused the material placed on record and gone through the orders passed by the revenue authorities. From the record, I noticed that the ld. CIT (A) has dealt with the issue on merits in para 5.1.1 to 5.1.4 of his order and the same is reproduced herein below :-
“5.1.1. The brief facts of the case are that the appellant who has retired is an employee of M/s Ajmer Vidhyut Vitran Nigam Ltd and has claimed an amount of Rs 12,09,600/- being leave encashment received as exempt u/s 10(10AA) of the Act. However, the AO, CPC while processing the return of income has allowed exemption of only Rs 3,00,000/- as against 100% exemption claimed by the appellant. Hence, this appeal.
5.1.2 I have considered the facts of the case as also the submissions of the appellant. The appellant is a retiree from M/s Ajmer Vidhyut Vitran Nigam Ltd., which has been established under the Companies Act, 1956 by Govt of Rajasthan. The Ajmer Discom has been created with the principal object of engaging in the business of distribution and supply of electricity in 11 districts of Rajasthan. It is seen that the appellant has merely claimed that he is working as a State Government Employee whereas the pension and other emoluments have been issued by AJMER VIDHYUT VITRAN NIGAM LTD. The same is also appearing as a Public Sector Undertaking on the official website of Comptroller & Auditor General in cag.gov.in and also under Rajasthan PSU’s in the website indianpsu.com and other publicly available documents. Hence, there is no confusion that the company Ajmer Vidhyut Vitran Nigam Ltd is a State Government Public Sector Undertaking and appellant is an employee of this State PSU. No evidence to the contrary has been furnished despite opportunity granted. Here, reliance is placed on the decision of Hon ‘ble Delhi High Court in the case of Kamal Kumar Kalia Vis Union of India (2020) 268 Taxman 398/ 313 CTR 779 (Delhi) (HC) dated 08.11.2019, wherein the issue under consideration was whether the appellant being employee of Public Sector Undertaking (PSU) and Nationalised Banks can be treated as government employee for the purpose of exemption u/s 10(10AA)(1) of IT Act. In the said case, the Hon ‘ble High Court held as under: “The petitioners, who were the employees of the Public Sector Undertaking and Nationalised Banks, filed writ contending that they were discriminated against Central Government and State Government employees. The Central Government and State Government employees are granted complete exemption in respect of the cash equivalent of the leave salary for the period of earned leave standing to their credit at the time of their retirement. Dismissing the petition the Court held that merely because Public Sector Undertaking and Nationalised Banks are considered as ‘State’ under article 12 of the Constitution of India for the purpose of entertainment of proceedings under Article 226 of the Constitution and for enforcement of fundamental right under the Constitution, it does not follow that the employees of such Public Sector Undertaking, Nationalised Banks or other institutions which are classified as ‘State’ assume the status of Central Government and State Government employees, Accordingly the petition is rejected,”
5.1.3 Further, in the case of KPTCL Davangere V/S ITO (2018), the Hon ‘ble ITAT, Bangalore vide its order in ITA No 170 ITD 587 (Bang.) (Trib) has held that assessee being a statutory corporation its employees could not be regarded as State or Central Government employees and, therefore, exemption under S. 10(10AA)(i) was not available and assessee was liable to deduct tax at source.
5.1.4 In view of the above, the action of the AO of restricting the exemption u/s 10(10AA) to Rs 3,00,000/- is found to be in order. These grounds of appeal are, therefore, dismissed.”
After having meticulously gone through the findings of the ld. CIT (A), I noticed that it is an undisputed fact that assessee had retired as an employee of M/s. Ajmer Vidhyut Vitran Nigam Ltd. and had claimed an amount of Rs. 12,09,600/- being Leave Encashment received as exempt under section 10(10AA) of the IT Act. However, while processing the return of income, the AO had allowed exemption of Rs. 3,00,000/- as against 100% exemption claimed by the assessee. The ld. CIT (A) also upheld the order of the AO. Now the only question raised before me is as to whether the assessee is entitled for 100% exemption under section 10(10AA) being a retiree/employee of M/s. Ajmer Vidhyut Vitran Nigam Ltd. In this regard, from the record, I also noticed that the assessee had merely claimed that he was working as State Government Employee whereas the pension and other emoluments have been issued by M/s. Ajmer Vidhyut Vitran Nigam Ltd. The said M/s. Ajmer Vidhyut Vitran Nigam Ltd. is appearing as a Public Sector Undertaking on the official website of Comptroller & Auditor General in cag.gov.in and also under Rajasthan PSU’s in the website indianpsu.com and other publicly available documents. Therefore, by considering these facts, there remains no confusion that the company M/s. Ajmer Vidhyut Vitran Nigam Ltd. is a State Government Public Sector Undertaking. Therefore, while relying upon the decision of Hon’ble Delhi High Court in the case of Kamal Kumar Kalia vs. Union of India (2020) 268 Taxman 398 (Delhi) dated 08.11.2019 wherein the Hon’ble High Court while dealing with the identical issue had held that employees of Public Sector Undertaking (PSU) and Nationalized Banis or other Institutions which are classified as ‘State’ cannot be assumed the status of Central Government and State Government employees and the said decision was also followed by the Coordinate Bench of ITAT Bangalore in the case of KPTCL Davangere vs. ITO, 170 ITD 587 (Bang.)(Trib.) and the ld. CIT (A) while rightly following the aforementioned order, had dismissed the appeal of the assessee. No contrary decision has been placed on record before me in order to contradict the well reasoned findings recorded by the ld. CIT (A). Therefore, I see no reason to interfere with or to deviate from the well reasoned findings recorded by the ld. CIT (A). The appeal filed by the assessee stands dismissed.
6. In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 17/05/2023.
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