TaxTMI 
TaxTMI 
2017 (6) TMI 168
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....n taken by the Assessing officer U/s 151 of the I.T. Act, 1961, as required. If any approval is taken then the approval is in very mechanical manner without application of mind by the statutory authority hence the proceedings initiated U/s 147/148 is illegal, bad in law and without jurisdiction. 4. That, the assessing officer/CIT(A) erred in completing the assessment proceedings U/s 147 r.w.s. 148, without supplying the reasons recorded to the assessee appellant, which is illegal, bad in law and without jurisdiction. 5. That the additions/ disallowances made are illegal, unjust, highly excessive and are not based on any material on record by the Assessing Officer. The total income of the Appellant has been wrongly and illegally computed by the Assessing Officer at Rs. 16,08,211/- as against income declared at Rs. 2,24,500/-. 6. The assessing officer erred in making the addition of Rs. 6,50,000.00 on account of the arrear of Gratuity received during the year on the retirement of the assessee appellant U/s 10(10)(iii) of the Act due to the revision in Civil Service Rules of State of Haryana. The CIT(A) has erred in law and on facts in upholding the action of the AO. 7. The as....
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....ing to Rs. 10,00,000/- and arrear of leave encashment amounting to Rs. 2,61,031/- and claimed the same amount as exempt u/s 10(10) of the Act. The assessee also filed the detailed note on payments of gratuity, leave encashment and LTC etc. on superannuation alongwith the return of income. The AO made the impugned addition by observing as under: "In view of the finding given in the foregoing paras, the employee of the CCS HAU cannot be termed as Govt. employee as neither they are under the control of Haryana Govt. nor their pay is debited to the consolidated funds of the state. Application of CSR Vol. II does not confer vice-versa status as Govt. employee under any rule/authority as claimed by the assessee. Hence, it is clear that university employees are covered u/s 10(10)(iii) of the Income-tax Act, 1961 because neither sec. 10 (10) (ii) applies as they are not receiving gratuity under the payment of gratuity Act, 1972 nor from the gratuity funds mentioned u/s 10(10)(i) of the Act. In view of these facts, the exemption allowable to the assessee in respect of gratuity and leave encashment is only 3.5 lacs and Rs. 3,00,000/- respectively which has already been claimed/allowed. Thus....
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....ed that an identical issue relating to the gratuity, having similar facts has already been adjudicated by the ITAT Delhi Benches 'SMC-1', New Delhi in ITA No. 1307/Del/2016 for the assessment year 2010-11 in the case of Ram Kanwar Rana Vs ITO, Ward-3, Hisar, wherein the relevant findings have been given in paras 4 to 10 of the order dated 16.06.2016 which read as under: "4. I have heard the rival submissions and perused the relevant material on record. The controversy in this appeal can be viewed separately in respect of receipt of gratuity amount and leave encashment. In so far as the addition on account of gratuity received by the assessee amounting to Rs. 6,50,000/- is concerned, it is found that the case of the assessee is that this amount falls u/s 10(10)(i) of the Act. On the contrary, the Revenue has treated it as a case falling u/s 10(10)(iii). In order to appreciate the rival contentions in right perspective, it will be apposite to set out the relevant parts of section 10, as under:- "(10) (i) any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or ....
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....emption limit prevalent at that time at Rs. 3,50,000/- was used by the assessee. It is nobody's case that the extended limit of exemption can be applied to the assessee, because of his retirement which took place much before the cut-off date. To be more specific, the question is as to whether the extant case falls under clause (i) or clause (iii) of section 10(10). If a case does not fall under clause (i), it will automatically go to clause (iii). On a specific query from the Bench, the ld. AR submitted that the case of the assessee should be considered under sub-clause (i) of section 10(10) as a 'holder of civil post under a State.' In order to construe any person as a holder of civil post under a State, two requirements must be fulfilled viz., first that the employee should be holding a civil post and, second, such civil post must be under a State. 6. The first condition is that the employee should be holding a civil post. The assessee was appointed as a Research Assistant in December, 1971, who eventually rose to the post of Head of Department, Plant Breeding Department at the time of his retirement. Page 32 of the paper book is copy of the assessee's Pension Payment Order, wh....
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....ate'. 8. As the assessee is found to be an employee holding a civil post under a State, in my considered opinion, the provisions of section 10(10)(i) are fully attracted in this case entitling him to exemption for the amount under consideration. Once a case falls under clause (i) of section 10(10), the same cannot be brought within the purview of clause (iii) of section 10(10). I, therefore, hold that the assessee is entitled to exemption u/s 10(10)(i) in respect of gratuity amount received in total upto Rs. 10 lac, which covers a sum of Rs. 6,50,000/- received during the year. Overturning the impugned order on this score, I allow exemption u/s 10(10)(i) to the arrears of gratuity received by the assessee at Rs. 6,50,000/- during the instant year. 9. As regards the second amount of Rs. 1,88,720/- received by the assessee during the year towards the arrears of leave encashment, it is noticed that the assessee claimed exemption u/s 10(10AA)(i) which was refused by the AO by holding the case to be covered under sub-clause (ii) of section 10(10AA). The ld. CIT(A) affirmed the view taken by the AO on this point, thereby denying the benefit of exemption in respect of the arrears of l....