Neelam Gupta Vs Addl/JCIT(A)-2 (ITAT Delhi)
Summary: The assessee’s appeal for Assessment Year 2020-21 arose from the order of the CIT(A)/NFAC, Delhi, in proceedings under Section 143(1) read with Section 264 of the Income-tax Act, 1961. The substantive issue concerned denial of exemption under Section 10(10AA) in respect of leave encashment on retirement on the ground that the assessee was employed with Bank of Baroda and was not an employee of a Central or State Government department.
The Tribunal noted its earlier decision in Ram Charan Gupta, Jaipur v. ITO, Ward 4(2), Jaipur, ITA No. 408/JPR/2022 dated 27 June 2023, where the Revenue’s position concerning restriction of leave encashment exemption for a bank employee had been considered. The extracted proceedings also referred to the Delhi High Court’s decision in Kamal Kumar Kalia v. Union of India, concerning the distinction between employees of Public Sector Undertakings and nationalised banks and Central or State Government employees for purposes of Section 10(10AA). The Tribunal further noted that the Central Board of Direct Taxes had subsequently revised the exemption limit for leave encashment to ₹25,00,000 through Notification No. 31/2023.
Since the assessee’s leave encashment claim was ₹6,97,100, which was below the revised limit, the Tribunal relied upon the coordinate Bench reasoning and allowed the assessee’s claim within the prescribed threshold. The Tribunal accordingly adopted the extracted reasoning mutatis mutandis and accepted the assessee’s sole substantive ground. The appeal was therefore allowed.
