2016 (10) TMI 1054 - AT - Income Tax

Denial of exemption u/s 10(10) in respect of the amount received by the assessee towards arrears of gratuity and arrears of leave encashment - Held that - It is observed that the Delhi bench of the tribunal in Shri Ram Kanwar Rana vs. ITO, Ward-3, Hisar 2016 (6) TMI 687 - ITAT DELHI has allowed exemption in respect of the arrears of gratuity and arrears of leave encashment and dismissed the grounds about the initiation of re-assessment. Similar view has been taken in the case of Raghubir Singh Panghal vs. ITO 2016 (6) TMI 1163 - ITAT DELHI . Following the same, extend the benefit of exemption to the instant assessee also in respect of arrears of gratuity and arrears of leave encashment u/s 10(10)(i) and 10(10AA)(i). - Decided in favour of assessee.

Summary

Issues:
Appeal against CIT(A) order for AY 2010-11, Time-barred appeal, Condonation of delay, Denial of exemption for arrears of gratuity and leave encashment.

Analysis:
The appeal was filed against the CIT(A) order for the assessment year 2010-11, but it was time-barred by 131 days. The assessee filed a petition for condonation of delay, which was accepted, and the appeal was admitted for disposal on merits. The main issue raised in the appeal was the denial of exemption for the amount received by the assessee towards arrears of gratuity and leave encashment. The AO had disallowed the exemption claiming that the extended benefit was not available to the assessee as he retired before the cutoff date of 24.5.2010. The AO held that the correct sections applicable were 10(10)(iii) and 10(10AA)(ii) instead of 10(10)(i). The CIT(A) upheld the AO's decision, stating that the assessee was not eligible for exemption under 10(10)(i) as he was not a 'holder of civil post under the State Government'.

The Tribunal noted that in similar cases like Shri Ram Kanwar Rana vs. ITO and Raghubir Singh Panghal vs. ITO, exemption was allowed for arrears of gratuity and leave encashment. Following these precedents, the Tribunal extended the benefit of exemption to the current assessee under sections 10(10)(i) and 10(10AA)(i). The Tribunal dismissed other grounds raised by the assessee as they were not pressed during the hearing. Consequently, the appeal was partly allowed, granting the exemption for arrears of gratuity and leave encashment.

In conclusion, the Tribunal accepted the appeal for hearing after condoning the delay and addressed the issue of denial of exemption for arrears of gratuity and leave encashment. The decision was based on precedents where similar exemptions were allowed, leading to the partial allowance of the appeal.