Encashment of leave-Taxability regarding - Income Tax - 312/1981

Encashment of leave-Taxability regarding Circular No. 312 Dated 31/8/1981 To All Commissioners of Income-tax. Sir, Subject: Encashment of leave-Taxability regarding. A large number of references have been received by the Board on the decision of the Income-tax Appellate Tribunal, Madras Bench, in ITR. No. 348/MAD/78-79 in the case of Shri N.B. Tandolkar. In this decision the Tribunal has held that the amount received by an assessee on encashment of leave due to him is not taxable. 2. The Income-tax Department has not accepted the aforesaid decision of the Tribunal and is in reference before the Madras High Court. The stand of the department is that the amounts received on encashment of leave salary due to an employee, either in service or at the time of his retirement are taxable as part of salary income. 3. All Income-tax Officers working in your charge and in particular the Income-tax Officers assessing salary cases may be apprised of this stand taken by the department. Yours faithfully, (Sd.) V.B. Srinivasan, Secretary, Central Board of Direct Taxes.