DASHRATH KUMAR SEN,AJMER V. ACIT, NEFAC -1(2)(2),DELH, DELHI

ITA 1258/JPR/2024

AI Insights

The case revolves around the dispute concerning the exemption limit for leave encashment received by Dashrath Kumar Sen, a retired employee of BSNL, under section 10(10AA) of the Income Tax Act, 1961. Initially, the Assessing Officer restricted the exemption to Rs. 3,00,000, which was contested by the assessee. The CIT(A) upheld this decision, leading to the filing of an appeal with the Income Tax Appellate Tribunal. The Tribunal, referencing a recent amendment and a Delhi High Court decision, ruled in favor of the assessee, allowing the exemption up to Rs. 25,00,000.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469907 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2020-2021
• Other Referred Cases: Kamal Kumar Kalia & Ors. Vs. Union of India & Ors
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: ZEEBA MOHAMMADI
• Keywords: Revised return; Retrospective amendment; TDS; Benefit of exemption
• Section: 143(3); 142(1); 143(2); 143(1); 139(1); 10; 139(5); 10(10AA)

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 1258/JP/2024 fu/kZkj.k o\"kZ@Assessment Year : 2020-21 Dashrath Kumar Sen A-921, Chandra Vardai Nagar, Ajmer cuke Vs. ACIT, NeFAC-1(2), Delhi LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AEHPS0309B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Mrs. Zeeba Mohammadi, CA jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 19/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 05/03/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM On being aggrieved by the order of the National Faceless Appeal Centre, Delhi dated 12/08/2024 [ for short CIT(A)] the above named assessee preferred the present appeal. The dispute relates to the assessment year 2020-21. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated 08.09.2022 passed under section 143(3) r.w.s. 144B of the Income Tax Act, [ for short “Act”] by National Faceless Assessment Unit [ for short AO]. 2 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT 2. In this appeal, the assessee has raised following grounds: - “1 Ground-1 10(10AA) DISALLOWANCES OF EXEMPTION AS WE CLAIMED IN REVISED RETURN, BUT IT IS AN ERROR WHICH CAN BE RECTIFIED 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. 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 from the records is that the assessee claimed to be a central Government Public Sector Undertaking Retired Employee from BSNL (PSU). For the year under consideration the assessee e-filed its original return of income (ITR) u/s 139(1) vide Acknowledgement No. 855062330201220 on 20.12.2020 electronically showing total Income of Rs. 17,78,210/- after claiming the Deduction / Exemption u/s 10(10AA)/u/s 10(10B) /16(1) together with the permissible statutory deduction U/S 80C/U/S 80TTA read with chapter VIA of the Act involving consolidated amounting to Rs. 10,10,000/- deriving sources of 3 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT income under the Head \"Salary\" & \" Income from other Source\" only. After that the said assessee again E-filed the Revised ITR u/s 139(5) of I.T. Act, 1961 vide ack no. 332742950310321 on 31.03.2021 showing total Income at Rs.. 11,17,810/- only after claiming the Deduction/Exemption u/s 10 u/s 10(10AA)/u/s 10(10B) /16(1) together with the permissible statutory deductions U/S 80C/U/S 80TTA read with chapter VIA of I.T. Act, 1961 involving consolidated amounting to Rs. 16,70,400/- deriving sources of income under the Head \"Salary\" & \" Income from other Source only. The case was selected under CASS for the completion of the Complete scrutiny received & downloaded E-online departmental ITBA module with a direction to make enquiries or seeking for necessary clarification attributable to the authenticity or genuineness for the understated / suppression of income in Revised ITR as compared to the Original ITR sought for from the said assessee based on the involvement of the issues viz. \"Reduction of Income in Revised return of income (ITR) & further also the claim for Refund \" but assigned to the completion thereof u/s 143(3) r.w.s. 144B of I.T. Act 1961 involving the abidance under E-online departmental guidelines of the National Faceless Scrutiny Assessment after obtaining the approval accorded from the higher authority together with the approved selected issues or reasons\" was to be verified /examined 4 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT calling for the relevant queries in this regard through the departmental E- online. Accordingly, notices were issued u/s. 143(2) and 142(1) of the Act on various dates. Ld. AO after drawing comparative conclusive analysis in between both Original ITR vis-a vis Revised ITR together the computation as well as Calculation thereof the statistic have been worked out accordingly as per rule & regulation 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. 5 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT 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, the aforesaid consequential worked out Excess/surplus Exemption/Deduction of Rs. 6,60,409/- out of Rs. 9,60,409/- availed beyond the restricted maximum Limit of Rs. 3,00,000/- for the Encashment of Leave (EL) u/s 10(10AA) of I.T. Act, 1961 being prejudicial to the interest of revenue is disallowed and thereafter is finally added back into the Total Income of Revised ITR e-filed 31.03.2021 of the said assessee in the Interest of Revenue after making disallowance of the said amount. 4. Aggrieved from the order of the National Faceless Assessment Center, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: “6.0 I have perused the assessment order, appeal documents and submissions of the assessee filed during appellate proceedings. The assessee is a BSNL employee which is a Public Sector Undertaking. The main contention of the assessee is that he is eligible for exemption on the whole amount of Rs. 9,60,409/- received as leave encashment as against Rs 3,00,000 allowed in the assessment order. 6.2 The quintessence of the assessee's reasoning is that the cap of Rs 3 lakhs for exemption u/s 10(10AA) in the case of employees other than the Government employees was fixed with reference to the highest salary in Government of India, which at that point of time was Rs 30,000 per month. The salary in the Government was since revised and increased significantly but the cap of Rs 3 6 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT lakhs for non-government employees was not increased commensurately and remained the same. Accordingly, he pleaded that the exemption u/s 10(10AA) may be allowed as per his claim made in the return by taking into consideration the highest salary of the employee in Government of India in the impugned year. 6.3 I have considered the arguments of the assessee. As per the provisions of section 10(10AA), employees other than the Government employees are eligible to claim maximum leave encashment exemption of Rs.3 Lakhs at the time of retirement. There was no Government notification increasing the exemption limit for leave encashment at the time of filing the return of income for the impugned year. Of course, there was an amendment to section 10(10AA) w.e.f 1.4.2023 and the limit was increased from Rs 3 lakhs to Rs 25 lakhs vide notification no 31/2023 dated 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 therefore not fully satisfied. Considering the facts, the action of the AO was conformity with the extant provisions of law and there is no infirmity in the assessment order. Ground no 1 and 2 are dismissed. In ground no 3, the assessee seeks credit to self-assessment tax and the AO is directed to give the credit as per the claim. In result, the appeal is partly allowed.” 7 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT 5. As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A)/NFAC, the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the assessee, ld. AR of the assessee, has filed the written submissions which reads as under : “1. That the order of Ld. CIT(A), NFAC, Delhi denying the exemption claimed u/sec, 10(10AA)() upto Rs. 9,60,409/- and restricting the same to Rs. 3,00,000/- 2 That assessee is a BSNL, Central Government owned company employee 3. Any other matter with prior permission of the chair.\" \"The brief of facts of case are as under- (1) That assessee was a employee of M/s BSNL, Central Government. (A Central Government State Undertaking whose 100% share holding is with President of India). (2) The assessee retired during the year & received Rs. 9,60,409.00 as LEAVE ENCASHMENT. Which was claimed in return filed as exempt u/sec. 10(10AA) (3) The AO while processing the return u /sec u/s 143(3) r.w.s 144B of Act on 08.09 2022: has disallowed their claim u/sec, 10(10AA) for Rs. 9,60,409.00 & has restricted to Rs. 3,00,000.00 & balance Rs. 6,60,409.00 (Rs. 9,60,409.00 3,00,000.00) has been added to income. Rs (4) The LO. CIT(A) NFAC, after going into details, documents as held that \"As the appellant was not a Central Government Employee as on the deduction claimed by the Appellant is eligible for deduction u/sec. 10(10AA)(ii) of the Income Tax Act & not u/sec. 10(10AA)(i). Whereas the law is very clear. (a) Therefore it is hereby held that the appeal filed by the appellant claiming deduction for Rs. 9,60,409.00 u/sec. 10(1OAA)(i) of the Income Tax Act is devoid of merit and the same is hereby DISMISSED. 8 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT Ground of Appeal \"Ground-1 10(10AA) DISALLOWANCES OF EXEMPTION AS WE CLAIMED IN REVISED RETURN, BUT IT IS AN ERROR WHICH CAN BE RECTIFIED 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 Govt. Employees, the rule issued by the CBDT under sub clause 10(10AA) it is a mentioned below: 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 the behalf to the employees of that government It is clear from the above rule that the exemption, in respect of the amount of leave encashment for the employees covered under sub clause 2, is allowed by CBDT up to the limit of Central Government employees. Gazette notification is only a medium to inform the limit of leave encashment entitlement of the government employee. The importance of gazette notification is not more than that. The gazette n otification is into determining the exemption limit because the exemption limit has been 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 9 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT Since beginning the cabinet secretary has been getting the highest salary in government. Therefore, entitlement of leave encashment to the cabinet secretary is the limit of government employees since beginning. At present entitlement of leave encashment of the cabinet secretary is Rs. 29.25 lacs. All employees of Banks & LIC are getting much less leave encashment at the time of retirement in comparison to the cabinet secretary and therefore, leave encashment amount received by them is tax exer. As per above rule CBDT is bound to issue gazette notification as and when the leave encashment entitlement of the cabinet secretary is enhanced But unfortunately, it was an inadvertent lapse on the part of CBDT of not issuing gazette notification after the last gazette notification no. SO 588 E dated 31.05.2002. The CBDT wants to give the tax exemption under sub clause 10(10AA) ii of Income Tax Act, 1961 up to the limit of government employees. If BOT does not want to give the exemption up to the limit of government employees, why did they write that the amount of notification is equal to the limit of government employees? In view of the above it is very clear what the rule is & what is the purpose of notification. Thus from above it is clear that GAZETE NOTIFICATION is only a medium for limit, but it does not determine the exemption limit because the exemption limit has been 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 employees covered under subclause 2, is allowed by CBDT up to the limit of Central government employees. Gazette notification is only a medium to inform the limit of leave encashment entitlement of the government 10 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT employee. The importance of gazette notification is not more than that. The gazette notification is not determining the exemption limit because the exemption limit has been clearly specified in the above rule which stipulates the exemption limit for all non-govt. employees to be equal to the limit of government employees. (6) Since beginning the cabinet secretary has been getting the highest salary in government. Therefore, entitlement of leave encashment to the cabinet secretary is. the limit of government employees since beginning. At present entitlement of leave encashment of the cabinet secretary is Rs. 29.25 lakhs. All employees of BANKS & SEMI GOVERNMENT & LIC are getting much less leave encashment at the time of retirement in comparison to the cabinet secretary and therefore, leave encashment amount received by them is tax exempt (7) As per above rule CBDT is bound to issue gazette notification as and when the leave encashment entitlement of the cabinet secretary is enhanced. But unfortunately, it was an inadvertent lapse on the part of CBDT of not issuing gazette notification after the last gazette notification no. SO 588 E dated 31.05.2002. The CBDT wants to give the tax exemption under sub-clause 10(10AA) ii of income tax act, 1961 up to the limit of government employees. If CBDT does not want to give the exemption up to the limit of government employees, why did they write that the amount of notification is equal to the limit of government employees? In view of the above it is very clear what the rule is & what is the purpose of notification. (8) In the last gazette notification no. SO 588 E dated 31.05.2002 issued by CBDT, it has been mentioned that: \"In exercise of the powers conferred by Sub-Clause ii of clause (10AA) 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. 3.00 Lakhs as the limit in relation to employees mentioned 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 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT clause 10(10AA) ii of income tax act, 1961 is linked with the limit of government employee ie. cabinet secretary. The limit of Rs. 3.00 lakhs specified in the last gazette notification has no relevance and hence not valid as on date because this is not as per rules of CBDT as the same was prepared on the basis of the then salary of the cabinet secretary Rs. 30,000/- in 1998. As on date, the salary of the cabinet secretary is Rs. 2.925 lakhs. So the exempted limit for employees of sub- clause 10(10AA) ii is Rs. 29.25 lakhs as per rules. (11) To summarize, as per rules (a) What is the exemption for the employee of sub-clause 10(10AA) ii? It is equal to the limit of a government employee. (b) What is the limit of government employees? The leave encashment entitlement of a government employee who is getting the highest salary in central Government. At present the cabinet secretary is 5 getting the highest salary in Central Government. (c) How would the drawing disbursing officers know the limit of the Government employee? Through the gazette notification. It is only a tool to inform drawing disbursing officers the limit of government employees. Hence it is clear that as per the rules, the leave encashment amount received by the employees of BANKS & SEMI GOVERNMENT & LIC and others is tax exempt. Further As per CBDT chapter 3 of income tax act, 1961 rule number 10 (10 AA), the payment of leave encashment (LE) at the time of retirement is nontaxable. There are two sub clauses of section 10(10AA), Sub-clause 1st made for govt emps which clearly says that any amount received by emps of sub-section 1st is tax free. The emps other than govt are covered under sub-clause 2nd. As per this CBDT wants four points calculation from the emps & least amount of these four points shall be exempt. 1. Actual amount received. 2. Only 30 days earned leave in each year shall be considered for the whole service period. 3. Maximum 10 months LE amount shall be considered calculated on the basis of 10 months average salary. 4. Subject to such a limit as the central govt may by gazette notification (GN) in the official gazette, specify in this behalf having regard to the limit applicable in this behalf to the emps of that govt. As per above rules CBDT is giving exemption equal to exemption receivable by the govt emps. on LE amount received at the time of retirement. In these four points, 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 12 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT 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 regularly this limit also increased simultaneously so the non-govt employer can know at present what is the limit of govt. Emps. So to solve this problem CBDT wrote in their rule that they will declare this amount through a GN equal to the limit of a govt. emps. So the GN is only a tool to inform the LE entitlement of the CS. From 1982 to 2002, 10 GNs were issued by CBDT on certain intervals & all GN amounts were equal to the entitlement of the CS. Last GN issued by CBDT on 31.05.2002 W.EF 02.04.1998 of 3 lakhs that time the salary of the CS was 30,000/- pm so entitlement was 3 lakhs (30,000X10) The above facts are mentioned in the note sheet of CBDT which was written on April 29, 2002 which was provided to us through RTI. After 2002, CBDT forgot to issue further notification in this regard When we read all previous GNs issued by CBDT, we found that in every GN an important sentence was mentioned there the cent govt., having regard to the maximum amount receivable by its emps as cash equivalent of leave salary in respect of the period of earn leave at their credit at the time of retirement whether superannuation or otherwise, hereby specifies the amount of rupees 3 lakhs it is clear that the amount to be declared by the CBDT is already fixed in the said rules. There are no powers available to CBDT whether they will issue GN or not & they have no right to play with these rules. CBDT is bound to issue GN from time to time as & when entitlement of LE amount of highest post emps of Cent. Govt. increased As per CBDT rules, CBDT wants calculation of 4 points but for point number 4, CBDT did not issue GN by mistake & notification amount Rs. 3. Lakhs are not as per CDBT rule so calculation of point number 4 is not possible. Hence present circumstances the 4th point is null & void & calculation of this point is not possible. The calculation should be taken on the basis of 1st 3 points only and on the basis of these three points, my LE amount is non-taxable. 13 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT It is clear from the above that I claim full exemption as per CBDT rule, but you have allowed exemption for 3 lakhs only which is not correct. Please allow me full exemption. Asst. Director of Income Tax, CPC Bengaluru LEAVE ENCASHMENT 240000 NOTE SHEET Office Note sheet of Notification Rs. 3 Lakhs Leave Encashment Fully Exempted 143 and 10(10AA) any payment 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 clarification so issued by CBDT equally applies to the facts of the assessee. 7. Per contra, Ld. DR relied upon the order of lower authorities and submitted that when the assessment order passed. The assessee was given the benefit to the extent of exemption at that time and therefore, he prayed to sustain the addition. 14 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT 8. We have heard the rival contentions and perused the material placed on record. The bench noted that apple of discord in this case whether the claim of the assessee for leave encashment received at the time of retirement for an amount of Rs. 9,60,409/- be considered as exempt as per provisions of section 10(10AA)(ii) of the Act. The bench noted that the limit of leave encashment to be claimed by the assessee was revised to Rs. 25,00,000/- as specified vide notification No. 31/2023/F. NO. 200/3/2023- ITA-1 dated 24th May, 2023 and therefore, the assessee is eligible to to claim Rs. 9,60,409/- as claim eligible for deduction of the said amount of Rs. 9,60,409/- and Id. AO is directed to allow the claim of the assessee within the revised limit as prescribed. Since the issue has already been decided by the bench vide ITA No. 408/JP/2022 and same was followed in ITA no. 542/JP/2023. The finding recorded by the bench in ITA no. 408/JP/2022 reads as under : 8. We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee relying the decision of Hon’ble Delhi High Court has issued a notice to the Union of India in the case of Kamal Kumar Kalia & Ors. Vs. Union of India & Ors in WP(C) 11846/2019 dated 08.11.2019 wherein the court has given following directions :- “8. We are however of the, prima facie, view that the grievances of the petitioner with regard to exemption limit under Clause (ii) of Section 10 (10AA) not being raised since 1998, appears to be justified. This is so because over the decades, the pay-scales admissible to government servants, and even employees of the Public Sector Undertaking and Nationalised Banks and all others have been upwardly revised, keeping in view, the financial growth in the country as well as on account of rising inflation. The last drawn salaries have increased manifold since time and notification issued under Clause (ii) of Section 10(10AA) was lastly issued, 15 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT as taken note of hereinabove, on 31.05.2002. We therefore, issue notice to the respondents limited to 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 Suo motu 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 ld. AO is directed to allow the claim of the assessee u/s. 10(10AA) of the act within the revised limit as prescribed. In terms of these observations the appeal of the assessee is allowed. On being consistent with that we direct the Id. AO to allow the claim to the extent of the revised limit as per the circular as referred herein above. In the result, the appeal of the assessee is allowed. 9. Ground no. 1 & 2 being general and there is no specific grievance raised by the assessee therefore, the same is not required to be adjudicated. Order pronounced in the open court on 05/03/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 05/03/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 16 ITA No. 1258/JP/2024 Dashrath Kumar Sen vs. ACIT 1. The Appellant- Dashrath Kumar Sen, Ajmer 2. izR;FkhZ@ The Respondent- ACIT, NeFAC-1(2)(2), Delhi 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 1258/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "