Liyakatali Chhotumiya Saiyed, Anand V. Income Tax Officer, Ward-1(3)(1), Petlad

ITA 371/AHD/2022

AI Insights

The case involves Liyakatali Chhotumiya Saiyed, a retired employee of BSNL, who appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed a rectification order reducing the exemption on leave encashment from Rs. 7,31,440/- to Rs. 3,00,000/-. The Tribunal examined whether the entire leave encashment received from the Department of Telecommunications before joining BSNL should be exempted under section 10(10AA)(i) of the Act, and whether the leave encashment received from BSNL should be exempted under section 10(10AA)(ii). The Tribunal found similarities with a previous case (Babul Patel vs. ITO) and ruled in favor of the assessee, allowing full exemption for the portion of leave encashment received during employment with the Department of Telecommunications.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135618 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 28-12-2022
• Assessment Year: 2019-2020
• Appeal Filed On: 22-09-2022
• Other Referred Cases: Kamal Kumar Kalia & others vs. Union of India & others, Babul Patel vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 154; 143(1)

Judgement Text

आयकर आयकरआयकर आयकर अपी अपीअपी अपीलीय लीयलीय लीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद यायपीठ यायपीठ यायपीठ यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ SMC” BENCH, AHMEDABAD SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 371/AHD/2022 िनधा रण िनधा रणिनधा रण िनधा रण वष वष वष वष /Asstt. Year: 2019-2020 Liyakatali Chhotumiya Saiyed, Patthar Masjid, Saiyedwada, Khambhat, Anand-388620. PAN: AHNPS1354H Vs. I.T.O, Ward-1(3)(1), Petlad. (Applicant) (Respondent) Assessee by : Shri P.F. Jain, A.R Revenue by : Shri Purushottam Kumar, Sr. D.R सुनवाई क तारीख/Date of Hearing : 29/12/2022 घोषणा क तारीख /Date of Pronouncement: 15/03/2023 आदेश आदेशआदेश आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi, dated 26/07/2022 arising in the matter of assessment order passed under s. 154 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2019-20. 2. The assessee has raised following grounds of appeal: ITA no.371/AHD/2022 A.Y. 2019-20 2 1. The learned CIT(A) has erred in law and facts in holding the order of AO u/s.154 restricting the exemption u/s.10(10AA)(i) to maximum Rs.3 Lakhs only on account of leave encashment as against Rs.7,31,440/- claimed by the assessee. 2. On the facts of the assessee read with letter dated 04-05-2012 issued form the Corporate Office Taxation Section(BSNL), full exemption claimed by the assessee ought to have been allowed. 3. On the facts of the assessee, no order of section 154 ought to have been passed as it is not a mistake apparent on record. 4. The appellant craves leave to add, to alter and/or modify any ground of appeal. 3. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the order of the AO wherein exemption of leave encashment was restricted to Rs. 3 lakh against the total claim of Rs. 7,31,440/- only. 4. The facts in brief are that the assessee is an individual and retired from BSNL. The assessee on retirement received leave encashment of Rs. 7,31,440/- which was claimed as exempted in entirety under the provision of section 10(10AA)(i) of the Act in the return filed for the year under consideration which was also processed and accepted under section 143(1) of the Act. Subsequently, a rectification order under section 154 of the Act was passed wherein exemption claimed on leave encashment was reduced to the extent of Rs. 3 lakh only. 5. On appeal by the assesse, the learned CIT(A) confirmed the order passed under section 154 of the Act by holding that the assessee is employee of PSU and not government employee, therefore the assessee is not eligible to claim exemption @ 100% under section 10(10AA)(i) of the Act. As such, the assessee is not eligible to claim exemption under section 10(10AA)(ii) of the Act. Thus, the AO rightly restricted the exemption to the extent of Rs. 3 lakh as per the said provision of section 10(10AA)(ii) of the Act. The learned CIT(A) in holding so also made reference to the judgment of Hon’ble Delhi High court in case of Kamal Kumar Kalia & others vs. Union of India & others in W.P. No. 11846 of 2019 dated 08-11-2019. ITA no.371/AHD/2022 A.Y. 2019-20 3 6. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before me. 7. The learned AR before me submitted that assessee was originally the employee of central government under Department of Telecommunication. Subsequently, the Government of India (GOI), Department of Telecommunication vide order dated 07-01-2002 permanently put the employee (the assessee) into Bharat Sanchar Nigam Ltd (BSNL) a PSU w.e.f. 01-10-2000 in accordance with the provision of Rule 37-A of CCs (Pension) Rules as amended from time to time with previous sanction of President of India. Out of total leave encashment of Rs. 7,31,440/- received by the assessee on retirement from BSNL includes an amount of Rs. 6,85,115/- earned during the employment with Department of telecommunication and only an amount of Rs. 46,325/- received for the period of employment with BSNL. The learned AR in this regard drawn our attention on the order of GOI, Department of Telecommunication (DOT) dated 07-01-2002 and certificate issued by the BSNL, PGMTD Ahmedabad placed on pages 3 & 4 of paper book. The learned AR, accordingly contended that the assessee is eligible for 100% exemption under section 10(10AA)(i) of the Act for the leave encashment of Rs. 6,85,115/- earned from employment with DOT. To buttress his argument, the learned AR placed his reliance on the order of Mumbai Tribunal in case of Babul Patel vs. ITO bearing ITA No. 3261/Mum/2018. 8. On the other hand the learned DR vehemently supported the order of the lower authorities. 9. I have heard the rival contention of both the parties and perused the materials available on records. The fact of case are not in dispute, therefore I am not inclined to repeat the same for the sake of brevity. At the outset I note that fact of the case of appellant assessee are identical to the issue raised before co- ordinate bench of Mumbai ITAT in case of Shri Babul Patel vs. ITO bearing ITA ITA no.371/AHD/2022 A.Y. 2019-20 4 No. 3261/Mum/2018 where the issue was decided in favour of the assessee by observing as under: 9. I have heard the rival contentions and gone through the facts and circumstances of the case. The admitted facts are that the assessee was originally appointed as Junior Engineer with Indian Post and Telegraph Department, Govt. of India w.e.f. 24.04.1980 and thereafter, in permanent capacity as Junior Engineer in the Department of Telecommunications, Govt. of India w.e.f 22.03.1983 vide order dated 22.06.1986. Subsequently, with effect from 01.10.2000 vide order dated 19.01.2004 issued by Department of Telecommunications, Ministry of Communication and IT, Govt. of India, in accordance with the provisions of Rule 37A of CCS(Pension) Rules, permanently absorbed in the Mahanagar Telephone Nigam Limited (MTNL) a PSU undertaking of Govt. of India. I am of the view that the assessee had been in service under the Department of Telecommunication, Govt. of India and his stamps of appointment and pay-scale were governed by the Central Govt. Rules, framed all other such employees working in Govt. of India with effect from 24.04.1980 on adhoc basis and subsequently in permanent capacity vide order dated 22.06.1986 w.e.f 22.03.1983. The assessee was absorbed in MTNL, a Govt. of India Undertaking, w.e.f 01.10.2000 vide order dated 19.01.2004. I am of the view that as per the provisions of section 10(10AA)(i) of the Act, the assessee is entitled for exemption on the amount of leave encashment of leave earned during the period before absorption in MTNL as per section 10(10AA)(i) of the Act as applicable to Central Govt. because before that date he was employee of Govt. of India that the Central Government. The amount of leave encashment in respect of leave accrued after absorption in MTNL will be governed by the exemption as per section 10(10AA)(ii) of the Act. I find that the facts are clearly in favour of assessee and for 263 days of leave as on the date of absorption was available to the assessee, which was earned and unutilized from Government service i.e. Central Government and will be governed by 10(10AA)(i) of the Act. The balance 37 days of leave earned is from MTNL and will be governed as per the provisions of section 10(10AA)(ii) of the Act. Accordingly, I allow the appeal of the assessee and direct the AO to re-compute the exemption proportionately as directed above. 9.1 Before me, no material has been placed on record either by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside/stayed or overruled by the Higher Judicial Authorities. Before me, no material was placed on record to point out any distinguishing feature in the facts of the case of the assessee and case mentioned above. Thus, respectfully following the order the Mumbai Tribunal as mentioned/discussed above, I hereby directed the AO to allow 100% exemption of leave encashment received on account of employment with Department of telecommunication i.e. Rs. 6,85,115/- under the provision of section 10(10AA)(i) of the Act whereas for remaining amount the AO is directed to calculate the exemption as per the provision of section 10(10AA)(ii) of the Act. Thus, the ground of appeal raised by the Assessee is hereby partly allowed. ITA no.371/AHD/2022 A.Y. 2019-20 5 10. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the Court on 15/03/2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 15/03/2023 Manish