Chhaya Shantilal Pandya, Ahmedabad V. The ITO, Ward-7(2)(1), Ahmedabad

ITA 575/AHD/2022

AI Insights

The case involves Chhaya Shantilal Pandya, a retired employee of the MSME Development Institute, a Central Government institution, who appealed against the order of the CIT(A), National Faceless Appeal Center, Delhi. The dispute centered on the taxability of leave encashment received by the assessee upon retirement and the deduction of professional tax from her salary. The Assessing Officer had treated the leave encashment as taxable beyond a threshold of Rs. 3,00,000, which the assessee contested, arguing that as a Central Government employee, her entire leave encashment was exempt. The CIT(A) upheld the Assessing Officer's decision, leading to the appeal before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299988 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-02-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 25-12-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10; 10(10AA); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . No .5 75 /A h d / 20 22 ( A s se ss m e nt Y e a r : 20 19- 2 0 ) C h ha ya Sh a n ti la l P and ya C - 1 0 2, Ka me sh wa r An ne x y, Op p. Sa ng at h- 2 , M ote ra , Ah me da bad - 3 82 42 4 V s . I T O War d - 7 ( 2) ( 1 ) , A h me da ba d [P AN N o.A C PP P 9 6 82 C] (Appellant) .. (Respondent) Appellant by : Shri M. K. Patel, Advocate Respondent by: Shri Sanjay Jain, Sr. D.R. D a t e of H ea r i ng 28.02.2023 D a t e of P r o no u n ce me nt 03.03.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals), National Faceless Appeal Center (in short “NFAC”), Delhi on 09.11.2022 for A.Y. 2019-20. 2. The grounds of appeal raised by the assessee are as under: “1. That on facts, and in law, the learned NFAC has grievously erred in confirming the rejection of claim of exemption to the extent of Rs. 2,84,240/- u/s 10(10AA) of the Act, whereas, it ought to have been allowed as the leave encashment was received by the appellant from a Central Government Employer. 2. That on facts, and in law, the learned NFAC has grievously erred in confirming the rejection of claim of Rs.1,800/- made u/s 16(iii) of the Act in respect of payment of professional tax. 3. The appellant craves leave to add, alter, amend any ground of appeal.” 3. The assessee was an employee of the Central Government Institution namely MSME Development Institute (under Ministry of Micro, Small and Medium Enterprise, Government of India) Ahmedabad. She retired from here complicated service on 30.11.2018. During the year under consideration she earned Rs. 5,84,240/- against the amount of Leave ITA No. 575/Ahd/2022 Chhaya Shantilal Pandya vs. ITO Asst.Year–2019-20 - 2 - Encashment which is fully exempted under Section 10(10AA)(i) to the Income Tax Act, 1961. The Assessing Officer treated her as the other employee and deduction for Leave Encashment was allowed up to Rs. 3,00,000/- and addition of Rs. 2,86,040/- has been made. 4. Being aggrieved by the assessment order the file appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. The Ld. A.R. submitted that the assessee as regards Ground No. 1 the assessee was a Central Government Employee and the Leave Encashment is totally exempt in her case under Section 10(10AA) of the Act. The Ld. A.R. submitted that the Assessing Officer as well as the CIT(A) has treated her as non-Government Employee and therefore, made addition which is not sustainable. As regards, Ground No. 2 the Ld. A.R. submitted that the claim of Rs. 1,800/- made under Section 16(iii) of the Act in respect of payment of professional tax and therefore, is exempted. 6. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. As regards, Ground No. 1 the assessee is a Central Government Employee who retired on superannuation and therefore, entitled for exemption of Leave Encashment under Section 10(10AA) of the Act in entirety. The Assessing Officer as well as CIT(A) has totally ignored this fact and applied the threshold which is applicable to the employees which are not coming under Central or State Government. Therefore, the addition ITA No. 575/Ahd/2022 Chhaya Shantilal Pandya vs. ITO Asst.Year–2019-20 - 3 - made by the Assessing Officer is not justifiable. Hence, Ground No. 1 is allowed. As regards to Ground No. 2 the claim of Rs. 1,800/- made under Section 16(iii) in respect of payment of professional tax has been deducted from assessee’s salary and assessee is entitled for the said claim. Hence, Ground No. 2 is allowed. 8. In result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 03/03/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 03/03/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 28.02.2023 2. Date on which the type draft is placed before the Dictating Member 01.03.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .03.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .03.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 03.03.2023 7. Date on which the file goes to the Bench Clerk 03.03.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................