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TMI Blog2024 (11) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharashtra State Electricity Board and his employment tenure with PSU i.e. Maharashtra State Electricity Transmission Co. Ltd. - assessee has contended before us that the balance amount of retirement gratuity of Rs. 11,49,579/- is also eligible for full exemption as it is fully covered within the limit laid down as per section 4(3) of the Payment of Gratuity Act, 1972 (as amended) - With respect to the claim of exemption for leave encashment amounting to Rs. 23,99,740/- full exemption shall be available in respect of the proportionate amount of Rs. 15,33,910/- and for the balance of Rs. 8,65,830/- the assessee shall be entitled to claim exemption to the extent of Rs. 3,00,000/- only and the remaining amount of Rs. 5,65,830/- shall be taxable. This view finds support by the decision of Adinath Wandhekar [ 2024 (4) TMI 666 - ITAT PUNE] . However, the present facts need verification. Accordingly, we set aside this issue to the file of Ld. AO for verification of the details/calculation submitted by the assessee and allow the claim of exemption for retirement gratuity and leave encashment received by the assessee at the time of his superannuation on proportionate basis, as per law kee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questionnaire were issued and served upon the assessee, in response to which the assessee furnished his reply providing partial details and supporting documents called for including therein proof of retirement of the assessee on 30.11.2018 and receipt of retirement gratuity of Rs. 31,86,180/- and leave encashment of Rs. 23,99,740/-. However, no computation/explanation was provided with regard to the exempt amount of gratuity and leave encashment claimed by the assessee. Taking support of the relevant provisions of the Act, the Ld. Assessing Officer ( AO ) observed that the exemption u/s 10(10) and 10(10AA) of the Act is available only in the case of employees of State and Central Civil Services and Armed Forces in the entirety. The assessee being an employee of Maharashtra State Electricity Transmission Co. Ltd. which is a Public Sector Undertaking (PSU), cannot be said to be a member of State or Central Service. In any other case, exemption for gratuity received is subject to a limit of Rs. 20,00,000/- as prescribed by the Payment of Gratuity (Amendment) Act, 1972 effective from 29.03.2018. Similarly, exemption for leave encashment, for civilian employees other than members of Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee carried the matter before the Ld. CIT(A) challenging the above additions made by the Ld. AO. Before the Ld. CIT(A) the assessee contended that he is eligible for full exemption for retirement gratuity and leave encashment as he is the employee of a company which was formed by Notification in the Official Gazette of Industries Energy and Labour Department of Government of Maharashtra and under Electricity Act, 2003. The employees of these statutory establishments are holders of civil post. The assessee also referred to Annexure 1 of Question No. 1923 on 14.03.2013 in Rajya Sabha by Hon ble Minister of State in the Ministry of Personnel Public Grievances and Pensions and Minister of State in Prime Minister s Office stating clearly the definition of Government servant under clause (b) (c). He also took support of the decision of Delhi Tribunal wherein it has been held that the employees of these statutory establishments are holders of civil post. As regards, the investment in mutual funds of Rs. 50,00,000/-, the assessee contended before the Ld. CIT(A) that the said investment was made from the retirement benefits i.e. Provident Fund, Gratuity, Leave Encashment etc. received by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal before the Tribunal against the order of the Ld. CIT(A) by raising the following grounds of appeal : 1. National Faceless Appeals Centre (hereinafter referred to as learned CIT(A) ) erred in law and on facts in confirming the assessed income of the appellant to the tune of Rs. 69,99,930 thereby partially sustaining the additions made by National Faceless Assessment Centre. 2. The learned CIT(A) erred in law and on facts in not appreciating the fact that, the appellant was a Government employee as covered in Section 10(10)(i) and Section 10(10AA) (i) of Income Tax Act, 1961. 3. The learned CIT(A) erred in law and on facts in not allowing the exemption of Retirement Gratuity to the tune of Rs. 11,86,180 u/s 10(10) and Leave Encashment amounting to Rs. 20,99,740 u/s 10(10AA) of Income Tax Act, 1961 entitled to State Government Employees or holders of Civil Posts under the State. 4. Alternatively, and without prejudice to Ground Nos. 2 and 3 above; the learned CIT(A) erred in law and on facts in not allowing full exemption of Retirement Gratuity amounting to Rs. 20,36,601 u/s 10(10)(i) and full exemption of Leave Encashment amounting to Rs. 15,33,910 u/s 10(10AA)(i) of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act for the period of his employment with PSU i.e. Maharashtra State Electricity Transmission Co. Ltd. The Ld. AR therefore urged that full exemption of retirement gratuity amounting to Rs. 20,36,601/- u/s 10(10)(i) and full exemption of leave encashment amounting to Rs. 15,33,910/- u/s 10(10AA)(i) of the Act being portions of retirement benefits accrued to the assessee during his employment with State Government i.e. Maharashtra State Electricity Board should be allowed. He further submitted that the Ld. CIT(A) ought to have allowed full exemption for retirement gratuity of Rs. 11,49,579/- accrued during his employment tenure with PSU i.e. Maharashtra State Electricity Transmission Co. Ltd. since it is covered with in the exemption ceiling limit of Rs. 20,00,000/-. With respect to the exemption claim of leave encashment, he submitted that the addition should be restricted to Rs. 5,65,830/- after allowing benefit of exemption ceiling limit of Rs. 3,00,000/- accrued during the assessee s employment tenure with PSU i.e. Maharashtra State Electricity Transmission Co. Ltd. The Ld. AR submitted a chart showing the calculation of exempted and taxable portion for gratuity and leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22; iii. Mohan Baliramji Thakre and Ors. Vs. ITO in ITA No. 375/NAG/2022 (Nagpur-Tribunal), dated 19.04.2024; iv. Smt. Sapna Raysoni Vs. ITO, 159 ITD 1 (Pune-Tribunal), dated 29.02.2016; v. ITO Vs. Mahatma Gandi University, 177 ITD 508 (Cochin Tribunal), dated 14.05.2019; vi. Ram Kanwar Rana Vs. ITO, 159 ITD 431 (Delhi-Tribunal), dated 16.06.2016; vii. Adinath Wandhekar Vs. ITO in ITA No. 1388/PUN/2023 (Pune-Tribunal), dated 08.03.2024; and viii. Ravindra Kharche Vs. ACIT in ITA No. 228/NAG/2023 (Nagpur- Tribunal), dated 16.04.2024. 6. The Ld. DR, on the other hand, supported the order of Ld. AO/CIT(A) and submitted that since the assessee was an employee of PSU at the time of his superannuation, he is not a Government employee and therefore not entitled to claim of full exemption in respect of retirement gratuity and leave encashment received by him u/s 10(10)(i) and 10(10AA)(i) of the Act respectively. He relied on the decision of the Hon ble High Court of Judicature at Bombay, Nagpur Bench in the case of Srikantha Gopal Mandyam Vs. Union of India Vs. Union of India in Writ Petition No. 1039 of 2017 dated 19.09.2018 wherein the Hon ble High Court observed that even otherwise, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of section 10(10)(ii) of the Act. The assessee has contended before us that the balance amount of retirement gratuity of Rs. 11,49,579/- is also eligible for full exemption as it is fully covered within the limit laid down as per section 4(3) of the Payment of Gratuity Act, 1972 (as amended). With respect to the claim of exemption for leave encashment amounting to Rs. 23,99,740/- full exemption shall be available in respect of the proportionate amount of Rs. 15,33,910/- and for the balance of Rs. 8,65,830/- the assessee shall be entitled to claim exemption to the extent of Rs. 3,00,000/- only and the remaining amount of Rs. 5,65,830/- shall be taxable. This view finds support by the decision of the Co-ordinate Bench of the Pune Tribunal in the case of Adinath Wandhekar Vs. ITO in ITA No. 1388/PUN/2023 (supra) (Pages 127 to 132 of Paper Book-I refers). However, the present facts need verification. Accordingly, we set aside this issue to the file of Ld. AO for verification of the details/calculation submitted by the assessee and allow the claim of exemption for retirement gratuity and leave encashment received by the assessee at the time of his superannuation on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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