AI Drafter 
TaxTMI 
TaxTMI 
2025 (3) TMI 619
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.... officer and deduction has been correctly claimed. 2 Ground No. 2:- That the order of Ld. CIT(A), NFAC Delhi denying the exemption claimed u/sec. 10(10AA)(ii) upto Rs. 9,60,409.00 and restricting the same to Rs. 3,00,000.00. (That assessee is a Central Government owned company employee). (1) That during the year the assessee retired from the services of M/s BSNL. (2) He received Rs. 9,60,409.00 as leave encashment (As per Rules) & claimed exempt u/sec. 10(10AA) of Act. (3) The Ld. CIT(A) has disallowed this claim (Though earlier u/sec. 143(1) of Act their claim has been allowed; which was denied earlier under processing) of Rs. 9,60,409.00 even the basic exemption of Rs. 3,00,000.00 has not considered. (4) The Ld. CIT(A) has disallowed the claim of assessee for only reason that he is not a Government Employee so his case does not fall in the category of section 10(10AA)(i) but falls in the category of section 10(10AA)(ii). 3 Ground 3: The Assessee craves the right to add, delete, amend, or abandon any of the grounds of this appeal at the time or before the actual hearing of the case." 3. Succinctly, the fact as culled out fro....
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....ation within the ambit of the provisions of section/sub-section of I.T. Act, 1961. Further also the computation of Total income together with the calculation of Tax thereon have been verified / examined & also Test/Cross checked accordingly as per indispensable e-filed submissions/documents papers downloaded & observed and transpired found to be impugned/discrepancy for availing surplus/excess beyond the restricted maximum limit of Rs. 3,00,00/- by the consequential differential amount of Rs. 6,60,409- (i.e. worked out Rs. 9,60,409/--Rs. 3,00,000/) on behalf of the said assessee in Revised ITR e-filed on 31.03.2021 with the ambit of the provisions of sections/subsections 10(10AA) of I.T. Act, 1961 in case of Public Sector Undertaking/Ltd. Employees. Thus in view of above Excess/surplus amount of Encashment of Earned leave (EL) beyond the extent of restricted Maximum Exemption limit as per Rule & Regulation availed by the said assessee is absolutely wrong and contrary or violation to the provisions of Section 10(10AA) of I.T. Act, 1961 which is also prejudicial to the interest of revenue in the case of employees officiating/working under Public Sector Undertakings/Ltds. Hence forth,....
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.... 24.05.2023 but the amended provisions are applicable prospectively. In fact, the employees of different PSUs and scheduled banks who retired from service before 1.4.2023 filed a writ of mandamus in Kerala HC seeking retrospective application of the notification no 31/2013. The HC after considering the facts asserted vide order WP (C) No 3145 of 2022 dated 10.6.2024 that the decision to issue notification fell in the domain of the executive and dismissed the writ petition. 6.4 Another aspect to be noted is that the assessee filed the original return of income u/s 139(1) claiming the exemption of Rs 3 lakhs u/s 10(10AA) and subsequently revised the return u/s 139(5) with an enhanced claim of exemption. In a catena of cases, the Courts have held that the revision of return is permissible only in cases of omission or wrong statement due to bonafide inadvertence or mistake on the part of the assessee. Whereas in the instant case, the claim of exemption of Rs 3 lakhs u/s 10(10AA) as on the date of filing the original return of income was a valid claim and there was no omission or wrong statement in the return of income. The conditions precedent to revise the return were therefo....
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....LATER, The action taken by assessing officer is not correct as all information was in hand with the officer and deduction has been correctly claimed. Ground No. 2:- That the order of Ld. CIT(A), NFAC Delhi denying the exemption claimed u/sec. 10(10AA) (ii) upto Rs. 9,60,409.00 and restricting the same to Rs. 3,00,000.00. (That assessee is a Central Government owned company employee). (1) That during the year the assessee retired from the services of M/s BSNL (2) He received Rs. 9,60,409.00 as leave encashment (As per Rules) & claimed exempt u/sec. 10(10AA) of Act (3) The Ld. CIT(A) has disallowed this claim (Though earlier u/sec. 143(1) of Act their claim has been allowed, which was denied earlier under processing) of Rs. 9,60,409.00 even the basic exemption of Rs. 3,00,000.00 has not considered. (4) The Ld. CIT(A) has disallowed the claim of assessee for only reason that he is not a Government Employee so his case does not fall in the category of section 10(10AA) (1) but falls in the category of section 10(10AA)(i). Whereas the law is very clear. "As per chapter 3 of Income Tax Act 1961. for employees other than central & state....
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....n clearly specified in the above rule which stipulates the exemption limit for all non government employees to be equal to the limit of Government Employees Since the Cabinet Secretary has been getting the highest salary in Government hence this should be entitlement of leave encashment by all non employees too. Though the CBDT has issued a press release dated 25.05.2023 in form of notification no 31/2023 dated 24.05.2023 where the limit of Rs. 3.00 lakh u/sec 10(10AA)(ii) has been raised to Rs. 25.00 lakhs w.e.f. 01.04.2023. There is no link for the period 01.04.2022 to 31.03.2023 & back where there is no such notification. (Copy enclosed) The explanatory memorandum to this notification has further clarified that "No person is being adversely affected by giving retrospective effect to this notification" It is requested to consider the facts & grant relief the CIT(A) has straight way not even granted the basis old exemption u/sec. 10(10AA)(ii) of Rs. 3,00,000.00 & has disallowed the whole of claim of Rs. 9,60,409.00." (5) It is clear from the above rule that the exemption, in respect of the amount of leave encashment for the emp....
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....in that Sub-clause who retire, whether on superannuation or otherwise, after the 1st day of April, 1998." (Copy attached). (9) It again is amply clear from the above notification that the amount mentioned in gazette notification is linked with maximum amount receivable by government employees. On 2nd April 1998, the exemption limit of a government employee was Rs. 3.00 Lakhs & also for employees of sub-clause 10(10AA) il it was also Rs. 3.00 Lakhs. After that government employees are getting tax exemption up to Rs. 29.25 lakhs while employees of sub-clause 10(10AA) ii are getting only up to Rs. 3.00 Lakhs. How is it possible? In view of the above it is clear that, since beginning, the BANKS & SEMI GOVERNMENT & LIC have not properly studied the original rule issued by CBDT and not interpreted/ understood the rule correctly. (10) The CBDT had issued 10 gazette notification from 1982 to 2002. They forgot to issue further gazette notifications. If CBDT has forgotten to issue the notification for the last 19 years, that does not make any difference as the limit under sub 11 clause 10(10AA) ii of income tax act, 1961 is linked with the limit of government employee ie. c....
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...., no points says that CBDT wants to make a difference between Govt. emps & Non govt. emps. By making subclause 2nd CBDT is saying that the non-govt emps can get the exemption up to the entitlement of LE amount of the highest paid govt. emps and not more than that. This is the maximum limit fixed by CBDT. suppose an emps of private sector is getting a salary of Rs. 1 crore pm then his LE will be 10 crores & if the CBDT didn't make the sub-section 2nd & simply write in the rule that this payment is non-taxable then the whole amount of Rs. 10 crore will be tax exempted. The main purpose for making the sub-clause 2 is to give the exemption benefit to the nongovt emps is equal to the limit of govt. emps. At present the CS is holding the highest post & his salary is Rs, 2.925 lakhs & his entitlement of LE is 29.25 lakhs. So as per CBDT rule if a non-govt emp gets up to Rs. 29.25 lakhs, he is not supposed to pay a single rupees as tax. If he received more than Rs. 29.25 lakhs then only he has to pay the tax on the differential amount. When I read point number 4 I found that CBDT wants to give exemption up to the maximum limit of a govt, emps but due to increase in the salary ....
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....ayment of the nature referred to in sub-clause (1) received by an employee, 8 other than an employee of the Central Government or a State Government, in respect of so much of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise as does not exceed ten months, calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement whether on superannuation or otherwise, subject to such limit as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government: Ground 3: The Assessee craves the right to add, delete, amend, or abandon any of the grounds of this appeal at the time or before the actual hearing of the case." 6. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the limit of leave encashment which has been enhanced by CBDT should be given benefit to the assessee considering the facts of the case after considering the direction of Delhi High Court and therefore, that clarificati....