ITAT held that employees of the State Power Corporation are not "Government employees" or employees of a qualifying Government undertaking for purposes of s.10(10AA)/10(10A) IT Act. Accordingly, exemption on leave encashment is not available for the period of service rendered under the Corporation. However, ITAT found that the predecessor State Electricity Board constituted an undertaking of the State Government falling within s.10(10AA)/10(10A). Since A1 had rendered qualifying service with the Board from 18.11.1983 to 16.04.2010 and was subsequently compulsorily transferred to the Corporation under a restructuring scheme, denial of exemption for the portion relatable to Board service would defeat the beneficial object of the provision. ITAT therefore upheld relief for leave encashment of Rs.13,02,816 relatable to the Board service, while confirming taxability of the balance relatable to service with the Corporation.
ITAT held that employees of the State Power Corporation are not "Government employees" or employees of a qualifying Government undertaking for purposes of s.10(10AA)/10(10A) IT Act. Accordingly, exemption on leave encashment is not available for the period of service rendered under the Corporation. However, ITAT found that the predecessor State Electricity Board constituted an undertaking of the State Government falling within s.10(10AA)/10(10A). Since A1 had rendered qualifying service with the Board from 18.11.1983 to 16.04.2010 and was subsequently compulsorily transferred to the Corporation under a restructuring scheme, denial of exemption for the portion relatable to Board service would defeat the beneficial object of the provision. ITAT therefore upheld relief for leave encashment of Rs.13,02,816 relatable to the Board service, while confirming taxability of the balance relatable to service with the Corporation.
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