Pudhureddiyur Raju Kalaimani Vs ITO (ITAT Chennai)
Resignation Equals Retirement: Leave Encashment of ₹3 Lakh Exempt u/s 10(10AA), Chennai ITAT Rules
Chennai ITAT ‘B’ Bench allowed the assessee’s appeal for AY 2017-18 and held that leave encashment of ₹3,00,000 received on resignation is eligible for exemption u/s 10(10AA). Tribunal observed that the expression “retirement whether on superannuation or otherwise” used in section 10(10AA) is of wide amplitude and squarely covers cases of resignation, relying on binding precedents of Madras HC in CIT v. R.J. Shahney and Bombay HC in CIT v. D.P. Malhotra. ITAT rejected the Revenue’s contention that subsequent employment in the same year disentitles the exemption, holding that the statute imposes no such condition. It was further held that denial of exemption merely due to Form 26AS mismatch during processing u/s 143(1) is unsustainable when the claim is supported by Form 16 and settled law. Accordingly, the order of CIT(A) was set aside and AO was directed to allow exemption and recompute income.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, vide order dated 05.03.2025.
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