Leave encashment exemption limit under statutory sub-clause upheld as applicable, enabling acceptance of the revised exemption claim.

Claim for leave encashment exemption was assessed by reference to the scope of sub-clause (ii) of the statutory exemption and the Central Government notification fixing the permissible limit at 25,00,000 with effect from 1 April 2023; coordinate-bench decisions and a higher-court view were applied to treat the enhanced limit as applicable to the revised-return claim. On the stated facts the Tribunal allowed the assessee's revised claim for leave encashment exemption and directed the Assessing Officer to accept the claim as filed in the revised return.

---

---

Issues: Whether the assessee is entitled to claim leave encashment exemption of Rs. 12,13,200/- under section 10(10AA) of the Income-tax Act, 1961 instead of Rs. 3,00,000/- allowed by the Assessing Officer.

Analysis: The issue turns on the scope of clause (ii) of section 10(10AA) and the limit specified by the Central Government by notification. A statutory notification (No. 31/2023) has specified Rs. 25,00,000 as the limit under sub-clause (ii) with effect from 1st April 2023. Coordinate bench decisions and the Hon'ble Delhi High Court's view in Kamal Kumar Kalia & Ors. have been applied to interpret the effect of the notification on claims for leave encashment. On facts, the assessee revised the return to claim the full leave encashment amount received and relied on the enhanced limit specified by the notification; the Tribunal found the coordinate bench and the Delhi High Court authorities applicable and controlling.

Conclusion: The assessee's claim for leave encashment exemption of Rs. 12,13,200/- under section 10(10AA) of the Income-tax Act, 1961 is allowed and the Assessing Officer is directed to accept the claim as per the revised return.

---