In Dev Raj Sood v. ITO, the ITAT Delhi, held that an employee of a ‘University’ is entitled to full exemption of arrears of Gratuity and leave Encashment under section 10(10) of the Income Tax Act.
The assessee, an employee of Chaudhary Charan Singh Haryana Agricultural University, Hisar in the instant case, was aggrieved by the order of the AO whereby the Officer made addition on account of arrears of gratuity and leave encashment u/s 10(10)(iii) and 10(10AA)(iii) of the Income-tax Act, 1961. Assessee claimed that the above said amount are exempted under section 10(10) of the Act.
However, both the AO and the first appellate authority rejected the above claim and held that the assessee was not a holder of civil post under the State Government’ and hence not eligible for exemption u/s 10(10)(i) of the Act. Further, the assessee was held to be not covered u/s 10(10)(ii) of the Act as he did not receive any gratuity under the Payment of Gratuity Act, 1972. It was therefore, held that the employees of the Chaudhary Charan Singh Haryana Agricultural University, Hisar were covered u/s 10(10)(iii) of the Act, for which there is a limit on the exempt gratuity amount, which stood exhausted by the assessee in earlier year.
The bench noticed that the ITAT Delhi, in Dharam Jeet Dahiya Vs ITO, held that CCS University is a “State” for the purpose of the IT Act and therefore, assessee is entitled to full exemption of amount received by him on account of arrears of gratuity and leave encashment under section 10(10) of the Act.
Accordingly, the Tribunal allowed the second appeal filed by the assessee.
Read the full text of the Order below.
