2026 (4) TMI 1870

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....mployees of the Central Govt. or State Govt. as the cash equivalent of the leave salary in respect of the period of Earned Leave at his credit at the time of his retirement(whether) on superannuation or otherwise. 2. Any such payment (as given in para (i) above) received by an employee of her than employee Central or State Govt. in respect of so much of period of EL as does not exceed 1o months calculated on the basis of the average salary drawn by the employee during the period of 10 months immediately preceding his retirement (Section 10(10AA) of the IT Act 1961. 3. The issue related to restriction of leave encashment to Rs.3,00,000/- u/s.10(10AA) of the Act. The assessee, a non Government retired employee, claimed deduction o....

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....ercise of the powers conferred by sub-clause (ii) of clause (1044) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether superannuation or otherwise, hereby specifies the amount of Rs. 25,00,000 (twenty-five lakhs rupees only) as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise. 2. This notification shall be deemed to have come into force with effect from the 1st day of April, 2023. [Notification No. 31/2023/F. No. 200/3/2023-ITA-I] SOURAB....

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....0-2023 wherein it is held as follows: "7. We have heard the rival contentions and perused the material placed on record. The bench noted that the apple of discord in this case that the assessee has received a sum of Rs. 17,68,479/- as leave encashment which was claimed in the return of income filed as exempt u/s 10(10AA) of the Act. The CPC and ld. CIT(A) contended that in the light of this specific notification being not issued the leave encashment allowable up to Rs. 3,00,000/- only whereas we note from the submission of the assessee that the assessee has relied upon the notification No. 31/2023/F.No. 200/3/2023-ITA-1 dated 24th May, 2023 and submitted that the revised limit of Rs. 25,00,000/- increased on account of leave salary....

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....this aspect.  9. Issue notice, learned counsel for the respondents accepts notice. Respondents should file counter affidavits be filed within six weeks. Rejoinder thereto, if any, be filed before the next date. "8.1 Recently the Central Board of Direct Taxes Suomotu revised the limit for deduction u/s 10(10AA) of the Act and the revised limit now stood at Rs. 25,00,000 as specified vide notification no. 31/2023 issued by the ministry of finance. Since the leave encashment amount as claimed by the assessee is amount to Rs. 6,97,100/- which is below the revised limit of leave encashment exempt prescribed by the Board, the assessee is eligible to claim of deduction of said Rs. 6,97,100/-. Based on these observations the ....