AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1505
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....ctly in the alternative, the Ld. Commissioner of Income Tax (Appeals) has failed to consider the alternate submission of the assessee that he was entitled to complete Leave Encashment at least in respect of the period when he was a serving employee of the Punjab Government under Punjab State Electricity Board which is arbitrary and unjustified. 4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 5. That the order of Ld. Commissioner of Income Tax (Appeals) Officer is arbitrary, opposed to the facts of the case and thus untenable. 3. The facts of the case, as per the order of the Ld. CIT(A) are that the assessee is a retired Government employee, retired from PSPCL (Punjab State Power Corporation Limited), 100 per cent owned by the State Government. The assessee could not claim exemption under Section 10(10AA) of the Income Tax Act, 1961, on account of leave salary or leave encashment. When he realised this mistake of his which is apparent from the records, he submitted a rectification application u/s 154 of the Income Tax Act 1961 before the Assessing Officer rejected the application on the....
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.... years of service with the State Government and subsequently continued with an undertaking/company formed under the State Government's restructuring scheme, would be entitled to the benefit of exemption under section 10(10A) of the Act in respect of the commuted value of pension received on retirement. 8. From the record, it is clear that the Electricity Distribution Company, namely Punjab State Power Corporation Limited (PSPCL), cannot be treated as the State Government or an undertaking of the State Government within the meaning of section 10(10A) of the Act. Therefore, its employees are not entitled to the benefit of section 10(10A) of the Act for the period of their service under the Corporation. The plain and literal interpretation of section 10(10A) makes it evident that the exemption is available only to employees of the Central or State Government or of a local authority or other specified bodies. Accordingly, the assessee, who had served under PSPCL during the period 16.04.2010 to 30.11.2015, would not qualify for the benefit of section 10(10A) for that period. 9. However, the assessee had served with the Punjab State Electricity Board (PSEB) from 18.11.1983 to 16.04....
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.... such employment qualifies as Government employment for purposes of Section 10(10AA)(i). Section 10(10AA) reads as under: Section 10(10AA) of the Income Tax Act, 1961, provides for exemption of leave encashment received at the time of retirement: Clause (i): Entire leave encashment is exempt for employees of the Central or State Government. Clause (ii): In the case of any other employee, exemption is limited to: Actual amount received, 10 months' average salary, Leave standing to credit (cash equivalent), Rs.3,00,000 - whichever is least. Clause (iii): Pertains to other special cases such as employees governed by Industrial Disputes Act or notified schemes. 8.1 Section 10(10AA)(i) applies strictly to employees of the Central Government or a State Government. The statute does not extend this benefit to statutory corporations or government-owned companies, unless such extension is expressly provided. Merely being under the ownership and control of the State Government or being governed by State Service Rules does not convert the employer into a "State Government." Ld. AR has not pointed out any decision ....
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....elineation of the Central and State Governments under the Income-tax Act and the Constitution, do not include undertakings of such Governments as being synonymous with the Governments themselves for the purposes of the present controversy. In view of the above, we are of the considered opinion that the case laws relied upon by the assessee do not aid its case and are clearly inapplicable on both facts and law. Furthermore, no decision from the jurisdictional High Court or any binding authority was brought to our attention to conclusively demonstrate that State PSU employees are deemed to be State Government employees for the purposes of Section 10(10AA). 8.6 Thus, we find ourselves in agreement with the reasoning of the CIT(A). The assessee is eligible only for exemption under Section 10(10AA)(ii), i.e., up to Rs.3,00,000. 9. In the result, the appeal of the assessee is dismissed." In the case of Arvind Kumar Jolly vs ITO (ITA No.952/Chd/2025) - "9. We have considered rival submissions and examined the record. The issue before us is whether the assessee, a retired PSU employee, is entitled to exemption of leave encashment beyond the limit of Rs.3....
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....t of Ram Charan Gupta decided by the Jaipur Bench. In that case, the Coordinate Bench proceeded to allow the claim of deduction towards leave encashment, relying upon CBDT Notification No. 31/2023. However, it is material to note that the said notification was issued on 1 April 2023 and, by its plain terms, was prospective in nature. The Jaipur Bench had not examined the specific issue as to whether the notification could be given retrospective effect; the Bench merely proceeded to extend the benefit. A bare perusal of the notification, as has also been extracted by the learned CIT(A) in the impugned order, makes it manifest that the benefit was intended to be operative prospectively and not with retrospective force. Therefore, in our considered opinion, the reliance placed by the assessee on Ram Charan Gupta is of no avail. 9.6 The assessee further placed reliance on the decisions of Vijay Kumar Jain (Agra Bench), Devendra Singh Bhaskar (Ahmedabad Bench) and Goverdhan Deepchand (Ahmedabad Bench). In all these matters, the Coordinate Benches have simply followed the reasoning in Ram Charan Gupta. As already held above, the decision in Ram Charan Gupta cannot be construed a....