Leave encashment exemption applies retrospectively to non-government employees, leading to exclusion of taxable income under the raised ceiling.

Condonation of delay was granted after an unchallenged affidavit explaining late filing, permitting the appeal to proceed. A fiscal notification raising the leave-encashment exemption ceiling to a higher amount for non-government employees was treated as beneficial and held applicable with retrospective effect, resulting in exclusion of the impugned leave-encashment from taxable income to the extent of the revised ceiling. On that basis the assessment and appellate order were set aside and the assessing authority directed to give effect to the revised exemption, producing relief for the assessee.

---

---

Issues: (i) Whether delay in filing the appeal should be condoned; (ii) Whether notification dated 24.05.2023 raising the exemption limit under section 10(10AA) to Rs.25 lakhs is applicable with retrospective effect to the leave encashment received by the assessee.

Issue (i): Condonation of delay in filing the appeal.

Analysis: The applicant filed an affidavit explaining the delay on grounds of age and consulting multiple tax advisers; the affidavit was subsequently attested and the deposition remained unchallenged. The facts as presented support a discretionary grant of condonation.

Conclusion: Delay in filing the appeal is condoned in favour of the appellant.

Issue (ii): Applicability with retrospective effect of Notification No. 31/2023 dated 24.05.2023 which raised the leave-encashment exemption limit under section 10(10AA) to Rs.25 lakhs.

Analysis: The notification is a beneficial fiscal instruction extending the higher exemption ceiling to non-government employees. The notification was accepted as issued and applicable; applying the notification leads to exclusion of the relevant leave-encashment amount from taxable income within the raised limit.

Conclusion: The notification dated 24.05.2023 is applicable with retrospective effect to the assessee's leave encashment, and on that basis the assessment and impugned appellate order are set aside in favour of the appellant.

Final Conclusion: The appeal is allowed; the assessing authority is directed to give effect to the decision, resulting in relief to the assessee by application of the notification increasing the exemption limit under section 10(10AA).

Ratio Decidendi: A beneficial fiscal notification raising the exemption ceiling under section 10(10AA) applies with retrospective effect to non-government employees, and such application warrants setting aside assessments where the revised exemption covers the impugned amount.

---