2016 (7) TMI 1258 - AT - Income Tax

Denial of exemption in respect of the amount received by the assessee towards arrears of gratuity - Held that - Both the sides are in agreement that the facts and circumstances of the instant appeal are mutatis mutandis similar to those of the appeal in the case of Ram Kanwar Rana 2016 (6) TMI 687 - ITAT DELHI allowing exemption in respect of the arrears of gratuity and arrears of leave encashment and dismissing the ground about the initiation of re-assessment. Following the view, we extend the benefit of exemption to the extant assessee also in respect of arrears of gratuity u/s 10(10)(i)

Summary

Issues Involved: Denial of exemption in respect of arrears of gratuity under section 10(10) of the Income Tax Act.

Analysis:
1. Issue of Exemption Denial: The appeal was against the denial of exemption for the amount received as arrears of gratuity. The Assessing Officer (AO) had disallowed the exemption under section 10(10)(i) as the gratuity limit was exhausted in a previous year, and the enhanced limit was not applicable since the assessee retired before the specified date. The AO held that the assessee did not fall under the category of a government employee or receive gratuity under the Payment of Gratuity Act, 1972. Consequently, the amount of arrears of gratuity received was added to the income. The Commissioner of Income Tax (Appeals) (CIT(A)) upheld the AO's decision.

2. Judgment and Precedents: The ITAT Delhi, considering precedents like Shri Ram Kanwar Rana vs. ITO and Raghubir Singh Panghal vs. ITO, allowed the exemption for arrears of gratuity under section 10(10)(i) for the instant assessee. The ITAT noted that similar views were taken in various cases, leading to the extension of the exemption benefit. The grounds related to the initiation of reassessment proceedings were not pressed by the appellant's representative and were dismissed accordingly.

3. Conclusion: The ITAT Delhi partially allowed the appeal by granting exemption for the arrears of gratuity under section 10(10)(i) to the assessee. The judgment aligned with previous decisions and established the eligibility of the assessee for the exemption despite the earlier denial by the AO and CIT(A). The order was pronounced on 21.07.2016, providing relief to the appellant in this specific issue of denial of exemption concerning arrears of gratuity.