Appellate authorities can entertain fresh claims during proceedings under sections 10(10AA)(i) and 10(10AA)(ii) for leave encashment exemption

ITAT Jabalpur held that appellate authorities can entertain fresh claims during proceedings, following SC precedent in Goetze (India) Ltd. The assessee, who superannuated from Madhya Pradesh Power Management Co. Ltd. (formerly MP State Electricity Board), claimed leave encashment exemption under sections 10(10AA)(i) and 10(10AA)(ii). Following ITAT Ahmedabad's decision in Liyakatali Chhotumiya Saiyed case involving similar facts with BSNL employee, the tribunal restored the matter to AO for determining proportionate exemption based on government and PSU service periods. Appeal decided in assessee's favor for statistical purposes.

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Issues involved:
The judgment involves issues related to the rejection of fresh claim by the assessee, consideration of revised return for deduction, entitlement for leave encashment exemption, and the powers of appellate authorities to admit claims during appellate proceedings.

Issue 1: Rejection of fresh claim by the assessee
The assessee appealed against the order passed by Ld. Commissioner of Income Tax (Appeals) for the assessment year 2016-17, raising grounds regarding the legality of the order and non-consideration of certain aspects. The Assessing Officer rejected the rectification application by the assessee, stating that any fresh claim should be made through a revised return of income. On further appeal, Ld. CIT(A) rejected the claim at the threshold, emphasizing the need for a revised return for making fresh claims.

Issue 2: Consideration of revised return for deduction
The Tribunal, after hearing the parties, found that the appellate authorities can entertain fresh claims filed by the assessee during appellate proceedings, as per the decision of the Hon'ble Supreme Court in the case of M/s Goetze (India) Ltd. The Tribunal admitted the claim for adjudication, allowing the claim of the assessee for further consideration based on merit.

Issue 3: Entitlement for leave encashment exemption
The Tribunal referred to a similar case where the leave encashment received by an employee from a Government Department and a Public Sector Undertaking was allowed in proportion to the services rendered in both entities. In the present case, the assessee was employed with the Madhya Pradesh State Electricity Board, which later converted into a company. The Tribunal directed the matter back to the Assessing Officer for determining the exemption of leave encashment under the relevant provisions of the Income Tax Act.

Conclusion:
The Tribunal allowed the appeal filed by the assessee for statistical purposes, based on the findings of a similar case and the powers of the appellate authorities to admit fresh claims during appellate proceedings. The matter was restored back to the Assessing Officer for further determination of the exemption of leave encashment entitled to the assessee under the applicable provisions of the Act.

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