9911796707
TMI Blog1997 (7) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, even though the assessee resigned from the employment as per the salary certificate issued by the employer, viz., Shipping Corporation of India Ltd.?" The assessee is an individual. He was an employee of the Shipping Corporation of India Ltd. During the previous year relevant to the assessment year 1982-83, the assessee resigned from his service with effect from July 29, 1981. In the assessment of his income under the Income-tax Act, 1961 (for short "the Act"), for the above assessment year, the assessee claimed deduction under section 10(10AA) of the Act of the amount received by him from his former employer by way of cash equivalent of unutilised earned leave. This claim of the assessee was rejected by the Income-tax Officer as he wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any amount received by an employee on retirement from service by way of cash equivalent of unutilised earned leave was chargeable to income-tax under the head "Salaries". With a view to avoiding hardship to retiring employees, this clause was inserted with effect from April 1, 1978. It was amended by the Taxation Laws (Amendment) Act, 1984. By the said amendment, the words "on superannuation" occurring in clause (10AA) were substituted by the words "whether on superannuation". This amendment was made with retrospective effect from the date of inception of clause (10AA), i.e., April 1, 1978. Section 10(10AA), so far as is relevant, as it stood at the material time, read as follows : "10. Incomes not included in total income.--In computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under this sub-clause shall not exceed thirty thousand rupees, as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years. Explanation.--For the purposes of sub-clause (ii),-- the entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired ;" (emphasis supplied) On a plain reading of clause (10AA) of section 10, it is clear that exemption is available under the said clause only to retiring employees in respect of the amounts received by them by way of encashment of unutilised earned leave standing to their credit at the time of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tender one's resignation, vacate, withdraw, yield." Thus, both "retirement" and "resignation" result in the conclusion of the service career. In fact resignation from service is also one of the modes of retirement from service. Resignation is a voluntary act of the employee to retire from service. Once an employee resigns, his service stands terminated from the date on which his letter of resignation is accepted by the appropriate authority, unless there is any law or statutory rule governing the conditions of service to the contrary. In other words, on acceptance of resignation, the employee stands retired from service. The word "retirement" has not been used in clause (10AA) in the restricted sense to mean "retirement on superannuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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