Leave encashment exemption at the revised limit applies to retirement receipts within the enhanced ceiling.

Leave encashment received on retirement was held to qualify for exemption under section 10(10AA) within the revised statutory ceiling. The Tribunal applied the enhanced limit notified in May 2023 and followed its earlier coordinate bench view that the revised cap governs such retirement receipts. On that basis, the assessee's claim fell within the permissible exemption limit and the disallowance could not be sustained, so the addition was deleted.

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Issues: Whether the assessee, a retired employee of a public sector undertaking, was entitled to exemption on leave encashment under section 10(10AA) of the Income-tax Act, 1961 at the enhanced limit of Rs. 25,00,000.

Analysis: The assessment year in question fell within the regime of the Income-tax Act, 1961. The dispute turned on the application of section 10(10AA) to leave encashment received on retirement. The Tribunal noted that the exemption limit had been revised by Notification No. 31/2023/F. NO. 200/3/2023- ITA-1 dated 24 May 2023 to Rs. 25,00,000 and followed its earlier coordinate bench decisions applying the revised limit. On that basis, the assessee's leave encashment claim fell within the enhanced statutory ceiling and the disallowance could not be sustained.

Conclusion: The assessee was entitled to exemption of the leave encashment amount within the revised limit, and the addition was directed to be deleted.

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