2016 (7) TMI 1519 - AT - Income Tax

Exemption u/s 10(10)(i) and 10(10AA)(i) - Denial of exemption in respect of the amount received by the assessee towards arrears of gratuity and arrears of leave encashment - view taken by the AO that the assessee was not a holder of civil post under the State Government and hence not eligible for exemption u/s 10(10)(i) - assessee was held to be not covered u/s 10(10)(ii) as he did not receive any gratuity under the Payment of Gratuity Act, 1972 - HELD THAT - 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 reassessment. 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).

Summary

Issues involved:
Denial of exemption for arrears of gratuity and leave encashment under section 10(10) of the Income Tax Act.

Analysis:

1. Adjournment Request by Department:
The Department requested an adjournment due to the unavailability of the Senior DR. However, the AR opposed the adjournment, leading to the rejection of the request. The appeal was then heard ex parte against the Revenue.

2. Exemption Denial by AO and CIT(A):
The AO initiated re-assessment proceedings, contending that the assessee wrongly claimed exemption under section 10(10) for arrears of gratuity and leave encashment. The AO held that the extended exemption limit was not applicable to the assessee as he retired before the specified date. The CIT(A) upheld this view, denying the exemption under section 10(10)(i) and 10(10AA)(ii).

3. Judgment and Precedents:
The ITAT, Delhi referred to previous judgments where exemptions for arrears of gratuity and leave encashment were allowed. Citing cases like Shri Ram Kanwar Rana vs. ITO and Raghubir Singh Panghal vs. ITO, the Tribunal extended the benefit of exemption to the present assessee under sections 10(10)(i) and 10(10AA)(i). Other grounds not pressed by the AR were dismissed.

4. Decision and Conclusion:
The Tribunal allowed the appeal in part, granting exemption for arrears of gratuity and leave encashment to the assessee under relevant sections of the Income Tax Act. The order was pronounced on 19.07.2016, setting aside the denial of exemption by the CIT(A) and providing relief to the assessee based on precedents and legal interpretations.

This detailed analysis covers the issues involved in the judgment, the arguments presented, the legal interpretations applied, and the final decision rendered by the ITAT, Delhi in favor of the assessee regarding the denial of exemption for arrears of gratuity and leave encashment.