Anant Chintaman Gundalwar Vs ITO (ITAT Nagpur)
MSEB Employee Cannot Lose Full Gratuity and Leave Encashment Exemptions Due to Restructuring into MSEDCL: ITAT Nagpur
Material Facts of the Case
The assessee, Shri Anant Chintaman Gundalwar, joined the Maharashtra State Electricity Board as a Steno Typist pursuant to an appointment letter dated 30 September 1989.
Following reforms under the Electricity Act, 2003, the activities of the Maharashtra State Electricity Board were reorganised into separate entities undertaking generation, transmission and distribution functions. As a result of this restructuring, the assessee became an employee of Maharashtra State Electricity Distribution Company Limited.
During the assessment year 2020-21, the assessee retired from MSEDCL. Upon retirement, he received:
- Gratuity of Rs. 20,00,000; and
- Leave encashment of Rs. 13,82,240.
The assessee filed his return of income on 10 October 2020, declaring total income of Rs. 2,35,278. He disclosed salary income of Rs. 36,67,918 from MSEDCL.
Treating himself as a State Government employee, the assessee claimed the entire gratuity of Rs. 20 lakh as exempt under section 10(10)(i). He similarly claimed the complete leave encashment amount of Rs. 13,82,240 as exempt under section 10(10AA)(i).
Based upon a preliminary verification report, the Assessing Officer formed the view that the assessee had claimed excessive exemptions and reopened the assessment.
