AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 89
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....earned CIT(A) erred in confirming the disallowances of deduction of leave encashment of Rs. 4,26,190/- only claimed under section 10(10AA) of the Act. 3. The facts in brief are that the assessee is an individual and during the year under consideration was employed with BSNL. The assessee at the end of year under consideration also got retired. During the year under consideration, the assessee drawn gross total salary of Rs. 16,42,778/- which included leave encashment of 7,26,190/- only. The whole amount of leave encashment of Rs. 7,26,190/- was claimed as allowances/deduction under section 10(10AA) of the Act. Accordingly, the assessee after claiming allowances of leave encashment and certain other allowances/deduction under section 16 o....
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.... telecommunication only. 5.1 In this regard the assessee also referred to clause 24(b) of rule 37A of CCC pension Rule 1937 and contended that earned leave at the credit of the employees on the absorption (1st October 2000) shall stand transferred to CPSE (Central Public Sector Enterprise). 5.2 The AO/CPC wrongly disallowed part of deduction/exemption of leave encashment by treating the same as received by employee other than employee of Central or State Government. However, the learned CIT(A) after considering the submission of the assessee confirmed the disallowances made by the AO by observing as under: 5.2 The appellant has filed ITR u/s 139(1) for the A.Y. 2019-20 on 31.07.2019 by declaring Total Income of Rs. 10,85,810/....
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....ent 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: 5.5 For the AY 2019-20 relevant to the F.Y 2018-19, under consideration the leave encashment amount eligible for deduction u/s 10(10AA)(i) of the Act is Rs. 3,00,000/-. Therefore, the adjustment made by the CPC is confirmed. As a result the ground of appeal raised by the appellant in this regard is dismissed. 6. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 7. The learned AR before us filed paper book running from pages 1 to 55 and made identical submission as argued before the learned CIT(A). 8. On the contrary, the lea....
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....see has also placed on record a certificate issued by BSNL confirming that the leave encashment pertains to such government service. 9.1 In our considered view, the character of the leave encashment cannot be altered merely on account of subsequent absorption in BSNL. The crucial test is the nature and source of the leave accumulated. Where the leave has been earned during service under the Central Government, the benefit available to a government employee cannot be denied merely because the employee was later absorbed in a Public Sector Undertaking. The provisions governing absorption also clearly provide that accumulated leave stands transferred without changing its intrinsic character. 9.2 The learned CIT(A), in confirming the disa....
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....nnot be treated as a PSU and the assessee is entitled for exemption under section 10(10AA) of the Act. The CIT(A) as well as the Assessing Officer has not taken cognizance of these facts and wrongly denied the benefit of exemption of leave encashment under section 10(10AA) of the Act. In fact, in Para 4.3 of the CIT-A's order the decision of the Tribunal, Mumbai Bench in case of Babulal Patel has been quoted but the same was not at all consider. Therefore, the appeal of the assessee is allowed." 9.4 The ratio laid down in the said decision squarely applies to the facts of the present case. Further, the action of the AO in invoking rectification proceedings u/s 154 to withdraw a claim which was originally accepted in the processing of....