TaxTMI 
TaxTMI 
2026 (9) TMI 852
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....year 2023-24 and claimed the said amounts as deduction u/s. 10(10AA)(ii) of the Act. 4. Ld. Counsel submitted that the returns were processed u/s. 143(1) of the Act, restricting the deduction to only Rs.3 lakhs. The assessee contended that the issue regarding the deduction claimed under the said section is a debatable issue and, therefore, filed appeals. 5. Meanwhile, the Board issued Notification No. 31/2023/F. No. 200/3/2023-ITA-I, dated 24.05.2023, wherein the limit of leave encashment for non-Government employees was also raised to Rs.25 lakhs as the maximum benefit allowable u/s. 10(10AA)(ii) of the Act. However, the CPC, in a routine manner, restricted the leave encashment only to Rs.3 lakhs as against the assessee's claim of Rs.20,15,707/- and Rs.4,00,661/- for the assessment years 2020-21 and 2023-24, respectively. Ld. Counsel for the assessee submitted that the circular issued by the CBDT is a beneficial circular and is applicable even for the assessment years prior to the notification dated 24.05.2023. Ld. Counsel for the assessee further submitted that various Benches of the Tribunal had considered the said circular and held that private employees are also elig....
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..../2023-ITA-I dated 24.05.2023 and that the above said limit as regards leave encashment was raised to Rs. 25 lakhs. 7. In view of the notification dated 24.05.2023, which is a piece of evidence in the form of beneficial instructions meant for non government employees, the assessment order and the impugned order, passed by Learned CIT(A) deserve to be set aside.8. As a result, this appeal is allowed. Assessing Officer to give effect to this decision. 8. As a result, this appeal is allowed. Assessing Officer to give effect to this decision." 9. Similarly, the Jaipur Bench in the case of Ram Charan Gupta v. ITO in ITA No. 408/JPR/2022, dated 27.06.2023, held as under: "3. Succinctly, the fact as culled out from the records is that the assessee who has retired is a bank employee and has claimed an amount of Rs. 6,97,100/- being leave encashment received as exempt u/s 10(10AA) of the Act. However, the AO, CPC while processing the return of income has allowed exemption of only Rs. 3,00,000/- as against 100% exemption claimed by the assessee. Hence, this appeal. 4. Aggrieved from the order of the AO, CPC assessee preferred appeal before the ld. CIT(A)....
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.... of the ld. CIT(A) the assessee has preferred this appeal before this tribunal on the grounds as raised by the assessee as reiterated here in above para 2. To support the various grounds so raised by the assessee, the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below; "1. Under the facts and circumstances of the case learned CIT (Appeal) was not justified while confirming the order passed by AO u/s 143(1) Assessing total income Rs 1188620.00 Confirming Demand of Rs. 118280. Our submission Initially return was processed u/s 143(1) (vide document identification no. cpc/2021/A3/186338352 dt.02/12/2021) allowing the claim of Rs. 300000.00 u/s 10(10AA)-Earned Leave Encashment on Retirement. meaning thereby that there was enhancement in the income amounting by Rs. 397100.00 and assessing total income at Rs 1188620.00 This was made without providing any opportunity of being heard as it appears that this addition was made by treating the employee as non-government employee although no specific reasons has been informed to appellant In fact, this organization is regulated by Bylaws made by central Government, thus by....
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....00.00 u/s 10(10AA) however it appears that bank has not been treated as govt employee and disallowance has been effected which is not a correct proposition as per principal of natural justice it becomes mandatory on the part of assessing officer to provide the opportunity of being heard however factually employer of the appellant is govt therefore he is entitle for deduction of Rs 697000.00. 4. Kindly stay the demand. As disallowance has been made on incorrect presumption therefore demand is liable to be quashed 5. Assessee craves to add alter any of the grounds of appeal before or at the time of hearing. This ground of appeal is general in nature therefore no submission are being submit." 6. In addition to the above detailed written submission the ld. AR of the assessee also submitted that in the recent budget speech Hon'ble Finance Minister indicated that for increase in the limit and the related notification is issued. The ld. AR thus based on the said notification submitted that the relief be granted to the assessee. 7. The ld. DR is heard who has relied on the findings of the lower authorities and left the decision on bench to grant the reli....