Tribunal Rules Employee of Government-Owned Company Entitled to Leave Encashment Exemption Under Tax Law.

The Tribunal allowed the appeal, ruling in favor of the assessee regarding the exemption claim under section 10(10AA)(i) of the Act. The key issue was whether the assessee qualified as a Central Government employee. The Tribunal determined that employment with Indian Railway Catering and Tourism Corporation Limited, a Government of India Company, qualified the assessee as a Central Government employee, thereby entitling her to the leave encashment exemption. Consequently, the appeal against the NFAC, Delhi's order was upheld, allowing the exemption for the assessment year 2019-20.

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Issues involved:
The issue involves the disallowance of exemption claimed u/s. 10(10AA) (i) of the Act on the grounds that the assessee is not an employee of the Central or State Governments.

Summary:

Issue 1: Disallowance of exemption claimed u/s. 10(10AA) (i) of the Act

The appeal by the assessee was against the order dated 18.05.2023 by NFAC, Delhi pertaining to A.Y. 2019-20. The assessee filed a rectification application u/s. 154 requesting to allow her leave encashment as exempt u/s. 10 (10AA) of the Act, which was restricted by the CPC. The main contention was whether the assessee is a Central Government / State Government employee. The Tribunal found that the assessee was employed with Indian Railway Catering and Tourism Corporation Limited, a Government of India Company, where tax was deducted at source by the employer. As the assessee was employed with the Central Government, she was deemed eligible for the claim of deduction u/s. 10 (10AA) of the Act. Therefore, the appeal filed by the assessee was allowed.

In conclusion, the Tribunal ruled in favor of the assessee, allowing the claim of exemption u/s. 10(10AA) (i) of the Act based on the employment status with a Government of India Company.

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