2025 (4) TMI 723 - AT - Income Tax

Denial of Exemption u/s 10(10AA) on account of leave encashment on retirement - CIT(A) upheld the disallowance holding that the assessee being a retired employee of a public sector undertaking (SBI) could not be treated as a government employee for the purpose of claiming full exemption - HELD THAT - Considering the subsequent development and submissions made by the AR the appeal is dismissed as withdrawn. However the assessee is granted liberty to restore the appeal in accordance with law in case any difficulty arises in the matter of refund or any other connected issue.

Summary

The appeal before the ITAT Ahmedabad was filed by the assessee against the CIT(A) order, which upheld a rectification order under section 154 of the Income Tax Act, 1961. The rectification by the CPC, Bengaluru, limited the exemption under section 10(10AA) for leave encashment to Rs. 3,00,000, disallowing Rs. 5,90,808, and resulting in a demand of Rs. 1,88,580. The CIT(A) supported this limitation, stating the assessee, a retired SBI employee, could not claim full exemption as a government employee.The assessee later filed another rectification application, leading to an order accepting the original income return and nullifying the demand, with a refund of Rs. 1,010 determined. The appeal was withdrawn, with the tribunal noting the refund issue and granting liberty to restore the appeal if difficulties arise regarding the refund or related issues. The appeal was dismissed as withdrawn, with liberty to restore if necessary.