Leave encashment exemption for non-government employees is capped at the notified limit; excess claim was not allowable.

For a non-government salaried employee, leave encashment exemption under section 10(10AA) is confined to the CBDT-notified monetary cap. The assessee, not being a Central Government or State Government employee, could not claim exemption beyond that limit, and the adjustment under section 143(1) restricting the claim to Rs. 3,00,000 was upheld. The excess exemption claim was therefore rejected as not allowable under the Act.

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Issues: Whether the assessee, not being a Central Government or State Government employee, was entitled to claim exemption on leave encashment under section 10(10AA) beyond the prescribed limit.

Analysis: The assessee was an individual salaried employee and had claimed exemption for leave encashment under section 10(10AA) of the Income-tax Act, 1961. Since the assessee was neither a Central Government employee nor a State Government employee, the exemption was confined to the monetary limit notified by the CBDT. The adjustment made under section 143(1) restricting the claim to Rs. 3,00,000 was found to be in accordance with law, and the appellate authority had correctly sustained the disallowance of the excess amount.

Conclusion: The restriction of the leave encashment exemption to Rs. 3,00,000 was upheld, and the assessee's claim for a higher exemption was rejected.

Ratio Decidendi: For a non-government employee, leave encashment exemption under section 10(10AA) is limited to the notified monetary cap, and any claim in excess of that limit is not allowable.

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