2024 (1) TMI 261 - AT - Income Tax

Power of appellate authorities to entertain any fresh claim filed during appellate proceedings - Exemption of leave encashment entitled u/s 10(10AA)(i) and 10(10AA)(ii) - assessee superannuated from undertaking of Madhya Pradesh Government i.e. Madhya Pradesh Power Management Co.Ltd. and received Leave encashment - HELD THAT - We find that as held by Hon ble Supreme Court in the case of M/s Goetze (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT appellate authorities can entertain any fresh claim filed by the assessee during appellate proceedings and therefore, there was no bar for the Ld.CIT(A) to admit the claim and decide on merit. Accordingly, we admit the claim of the assessee for adjudication. Before us, assessee has relied upon the decision of Liyakatali Chhotumiya Saiyed vs ITO i 2023 (3) TMI 768 - ITAT AHMEDABAD wherein the assessee was retired from Bharat Sanchar Nigam Limited which was earlier a part of the Department of Communication, Government of India. The leave encashment received by the said assessee was directed to be allowed in proportionate of the services rendered in Government Department as well as Public Sector Undertakings. We find that facts of the instant case are exactly identical to the above case. The assessee was admittedly employed with the Madhya Pradesh State Electricity Board which was a Government Organization, which later on converted into a company namely, Madhya Pradesh Power Management Company Ltd., Jabalpur. Therefore, we restore the matter back to the file of AO for determination of the exemption of leave encashment entitled to the assessee under the provision of section 10(10AA)(i) and 10(10AA)(ii) - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
The judgment involves issues related to the rejection of fresh claim by the assessee, consideration of revised return for deduction, entitlement for leave encashment exemption, and the powers of appellate authorities to admit claims during appellate proceedings.

Issue 1: Rejection of fresh claim by the assessee
The assessee appealed against the order passed by Ld. Commissioner of Income Tax (Appeals) for the assessment year 2016-17, raising grounds regarding the legality of the order and non-consideration of certain aspects. The Assessing Officer rejected the rectification application by the assessee, stating that any fresh claim should be made through a revised return of income. On further appeal, Ld. CIT(A) rejected the claim at the threshold, emphasizing the need for a revised return for making fresh claims.

Issue 2: Consideration of revised return for deduction
The Tribunal, after hearing the parties, found that the appellate authorities can entertain fresh claims filed by the assessee during appellate proceedings, as per the decision of the Hon'ble Supreme Court in the case of M/s Goetze (India) Ltd. The Tribunal admitted the claim for adjudication, allowing the claim of the assessee for further consideration based on merit.

Issue 3: Entitlement for leave encashment exemption
The Tribunal referred to a similar case where the leave encashment received by an employee from a Government Department and a Public Sector Undertaking was allowed in proportion to the services rendered in both entities. In the present case, the assessee was employed with the Madhya Pradesh State Electricity Board, which later converted into a company. The Tribunal directed the matter back to the Assessing Officer for determining the exemption of leave encashment under the relevant provisions of the Income Tax Act.

Conclusion:
The Tribunal allowed the appeal filed by the assessee for statistical purposes, based on the findings of a similar case and the powers of the appellate authorities to admit fresh claims during appellate proceedings. The matter was restored back to the Assessing Officer for further determination of the exemption of leave encashment entitled to the assessee under the applicable provisions of the Act.