LAKSHMANA RAO SAMBANGI, VIZIANAGARAM V. INCOME TAX OFFICER, WARD-1, VIZIANAGARAM

ITA 224/VIZ/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8998 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-01-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 18-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Keywords: Date of conversion
• Section: 154; 2; 10(10AA); 143(1)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम “SMC” पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.224/Viz/2023 (ननधधारण वर्ा / Assessment Year : 2020-21) Sambangi Lakshmana Rao Flat No.F-2, Sai Praneetha Residency Town Center Layout, NR Sri Venkateswara Swamy Temple Vizianagaram [PAN : ARHPS1747C] Vs. Income Tax Officer Ward-1 Vizianagaram (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri Y.Surya Chandra Rao, AR प्रत्यधथी की ओर से / Respondent by : Dr.Aparna Villuri, DR सुनवधई की तधरीख / Date of Hearing : 24.01.2024 घोर्णध की तधरीख/Date of Pronouncement : 30 .01.2024 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN & Order No.ITBA/ NFAC/S/250/2023-24/1054159586(1) dated 05.07.2023, arising out of order passed u/s 154 of the Income Tax Act, 1961 (in short ‘Act’) dated 16.11.2021 for the Assessment Year (A.Y.) 2020-21. 2 I.T.A. No.224/Viz/2023, A.Y.2020-21 Sambangi Lakshmana Rao, Vizianagaram 2. Brief facts of the case are that the assessee, an individual, joined the Department of Telecommunications (DOT), Govt. of India on 22.03.1982. Subsequently, all the officers and staff working in the Department of Telecommunications were absorbed in BSNL w.e.f. 01.10.2000 vide Presidential Order, Govt. of India. The assessee retired from BSNL on 30.04.2019 and he was paid leave encashment amount of Rs.13,17,320/- for the leave available at his credit as on the date of retirement as under : Earned Leave amount from Dept. of Telecommunications - Rs.12,38,281 BSNL - Rs.79,039 As per the records of BSNL, the assessee had 282 days of earned leave at credit for the service rendered under DOT as on 01.10.2000. After absorbing the assessee into BSNL from DOT, he had earned 18 days of EL as on the date of retirement i.e. on 30.04.2019. The contention of the assessee was that he was originally employed with the DOT till 01.10.2000 and later on he was transferred to BSNL from 01.10.2000 and hence the entire sum of such leave encashment received at the time of retirement from BSNL is exempt u/s 10(10AA) of the Act. The assessee filed the return of income for the A.Y.2020-21 on 17.09.2020, which was 3 I.T.A. No.224/Viz/2023, A.Y.2020-21 Sambangi Lakshmana Rao, Vizianagaram processed u/s 143(1) of the Act and the maximum eligible amount of Rs.3,00,000/- only was allowed as exempt u/s 10(10AA). 2. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) upheld the order of passed by the AO and dismissed the appeal of the assessee. 3. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : 1. The order of the Commissioner of Income Tax (Appeals), Faceless Appeal Centre, Delhi u/s 154 is erroneous in law and contrary to the facts of the case. 2. The CIT(A) has failed to appreciate the fact that the BSNL was converted by the Government of India from the Department of Telecom and service rendered in the in the Department of Telecom is deemed to be service rendered as a Government employee and eligible for exemption at the time of retirement. 3. The CIT(A) is not justified in rejecting the plea of the Appellant and restricting the Leave Encashment to Rs.3,00,000/- u/s 10(10AA). 4. The CIT(A) has failed to appreciate the fact that the Appellant has rendered service to the Government of India (Central Government Employee) and leave encashment received at the time of retirement is fully exempted u/s 10(10AA) of the Income Tax Act in the case of Government Employees. 5. The CIT(A) has failed to appreciate and consider the scheme framed and benefits granted to the employees by the Government of India while corporatizing the Department of Telecom to Bharat Sanchar Nigam Limited. For these and any other ground or grounds that may be urged at the time of the hearing, it is prayed that the Order of the CIT(A), 4 I.T.A. No.224/Viz/2023, A.Y.2020-21 Sambangi Lakshmana Rao, Vizianagaram restricting the exemption and taxing the balance may please be quashed and grant relief to the Appellant. 5. All the grounds of appeal are related to denial of exemption claimed u/s 10(10AA). The Ld.AR submitted that the assessee joined Department of Telecom in year 1982 and the corporatization of the Department of Telecom to BSNL was done in the year 2000. While converting the Department of Telecom to BSNL, the Government of India has approved a scheme that the whole pensionary and retirement benefits till the date of conversion will be taken care by the Government of India and till the date of conversion all the existing employees would be treated as Government Employees. The Ld.AR submitted that this fact was ignored by the revenue authorities. The assessee filed a paper book and taking my attention to Presidential Order in the paper book at page 11, the Ld.AR pleaded to consider the facts of the case and grant relief to the assessee by allowing the exemption claimed. The Ld.AR relied on the decision of this Tribunal in the case of Vijay Pemmaraju Vs. ITO in I.T.A.126/Viz/2023 dated 29.11.2023 and pleaded to allow the appeal of the assessee. 6. Per contra, the Ld.DR contended that BSNL is a public sector unit, hence, the assessee is not eligible of exemption of leave encashment. He 5 I.T.A. No.224/Viz/2023, A.Y.2020-21 Sambangi Lakshmana Rao, Vizianagaram relied on the order of the Ld.CIT(A) and pleaded to uphold the same and dismiss the appeal of the assessee. 7. I have heard both the parties and perused the material filed on record. Now, the question before me is to decide whether the assessee is eligible for the benefit of full exemption of leave encashment under section 10(10AA) of the Act or not. It is undisputed fact that the assessee joined the Department of Telecom in the year 1982 which was corporatized by the Govt.of India in the year 2000. Presidential Order thereby absorbing the assessee permanently into BSNL with effect from 01.10.2000 was passed and the leave at the credit of the assessee was transferred to BSNL on the date of absorption as provided for under Sub Rule 24(b) of Rule 37-A of the CCS(Pension) Rules. I am of the view that as per provisions of section 10(10AA(i)) of the Act, the assessee is entitled for exemption on the amount of leave encashment of 282 days leave earned during the period before absorption into BSNL to the tune of Rs.12,38,281/- and 18 days of leave to the tune of Rs.79,039/- as per provisions of sub section 2 of section (10AA) of the Act. On the same set of facts and circumstances in the case of Vijay Pemmaraju, Visakhapatnam in I.T.A.No.126/Viz/2023 dated 07.11.2023, Coordinate Bench of the Visakhapatnam Tribunal, relying on the ratio laid down by 6 I.T.A. No.224/Viz/2023, A.Y.2020-21 Sambangi Lakshmana Rao, Vizianagaram the Ahmedabad Tribunal in the case of Pradipkumar Bhogilal Modi Vs. ADIT(CPC) Bengaluru vide I.T.A.No.83/Ahd/2023 dated 19.07.2023 allowed the appeal of the assessee. For the sake of clarity and convenience, I extract relevant part of the order of the Visakhapatnam Tribunal which reads as follows : “7. I have heard both the parties and perused the material filed on record. Now, the question before me is to decide whether the assessee is eligible for the benefit of full exemption of leave encashment under section 10(10AA) of the Act or not. It is undisputed fact that the assessee joined the Department of Telecom in the year 1981 which was corporatized by the Govt.of India in the year 2000. Presidential Order thereby absorbing the assessee permanently into BSNL with effect from 01.10.2000 was passed and the leave at the credit of the assessee was transferred to BSNL on the date of absorption as provided for under Sub Rule 24(b) of Rule 37-A of the CCS(Pension) Rules. I am of the view that as per provisions of section 10(10AA(i)) of the Act, the assessee is entitled for exemption on the amount of leave encashment of 280 days leave earned during the period before absorption into BSNL to the tune of Rs.8,60,776/- and 20 days of leave to the tune of Rs.61,484/- as per provisions of sub section 2 of section (10AA) of the Act. Coordinate Bench of the Ahmedabad Tribunal on similar facts and circumstances allowed the appeal of the assessee in the case of Pradipkumar Bhogilal Modi Vs. ADIT(CPC) Bengaluru vide I.t.a.No.83/Ahd/2023 dated 19.07.2023. For the sake of clarity and convenience, I extract relevant part of the order of the Tribunal which reads as follows : “7. Heard both the parties and perused all the relevant material available on record. The assessee was absorbed in the Department of Telecommunication in respect of BSNL vide Presidential Order dated 23.09.2019 which has given the permanent absorption effective from 01.10.2000. The assessee was initially appointed on 28.11.1983 in the Department of Indian Post and Telegraphs and therefore, he was initially appointed in the Central Government which was affirmed in the certificate from the Accounts Officer of BSNL on 18.01.2023 that the leave encashment for 300 earned leave was of Department of Telecommunication originally that of Indian Post and Telegraph Department and therefore, the same cannot 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 7 I.T.A. No.224/Viz/2023, A.Y.2020-21 Sambangi Lakshmana Rao, Vizianagaram 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.” Keeping in view the facts and circumstances of the case and respectfully following the decision of the coordinate bench of the Ahmedabad Tribunal, I find force in the submissions of the Ld.AR and accordingly allow the appeal of the assessee. 8. In the result, appeal of the assessee is allowed. In view of the foregoing facts and circumstances and respectfully following the decision of this Tribunal in the case of Vijay Pemmaraju (supra), I find force in the submissions of the Ld.AR and accordingly allow the appeal of the assessee. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 30 th January, 2024. Sd/- (द ु व्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 30.01.2024 L.Rama, SPS 8 I.T.A. No.224/Viz/2023, A.Y.2020-21 Sambangi Lakshmana Rao, Vizianagaram आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Sambangi Lakshmana Rao, Flat No.F-2, Sai Praneetha Residency, Town Center Layout, NR Sri Venkateswara Swamy Temple, Vizianagaram 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-1, Vizianagaram 3. The Principal Commissioner of Income Tax, Visakhapatnam 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam