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Issues: Whether the assessee, being neither a Central Government nor a State Government employee, was entitled to exemption for leave encashment beyond the notified ceiling under section 10(10AA) of the Income-tax Act, 1961.
Analysis: The claim for exemption was examined in the context of section 10(10AA) and the applicable CBDT notification limiting the exemption to Rs. 3,00,000 for a non-government employee. As the assessee was not a Central Government or State Government employee, the higher amount claimed could not be allowed. The adjustment made in processing the return and its confirmation in appeal were therefore found to be in accordance with law.
Conclusion: The restriction of leave encashment exemption to Rs. 3,00,000 was upheld and the claim for a higher exemption was rejected.
Ratio Decidendi: For a non-government employee, exemption on leave encashment is confined to the notified statutory ceiling under section 10(10AA) of the Income-tax Act, 1961.
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