The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench held that leave encashment of employees working in the department of telecommunication exempted under Section 10(10AA) of Income Tax Act,1961, .The period for leave encashment was calculated in respect of assessee’s working in the Department of Telecommunication and the same is fully exempted under Income Tax Act.
Therefore the bench deleted the disallowances made by the assessing officer.
Pradipkumar Bhogilal Modi, the taxpayer filed his return of income declaring total income of Rs.7,05,050/-. Thereafter an Intimation under Section 143(1) of the Income Tax Act received by the assessee thereby assessing the total income by making disallowance of exemption claim on account of leave encashment under Section 10(10AA) of the Income Tax Act.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal){ CIT(A)} . who upheld the decision of the AO. Thereafter the assesee filed another appeal before tribunal .
Before the tribunal Jyoti Rizwani, Counsel for assessee submitted that assessee was provisionally appointed as Junior Telecom Officer by the Department on 12.09.1990.
The Government of India Department of Telecommunication issued a Presidential Order dated 23.09.2019 thereby permanently absorbing the assessee in the Department of Telecommunication in Bharat Sanchar Nigam Ltd.
While absorbing into BSNL the period for leave encashment was calculated in respect of assessee’s working in the Department of Telecommunication and the same is fully exempted under Income Tax Act.
Saumya Pandey Jain, Counsel for Revenue submitted that the BSNL is a Public Sector Unit and therefore, the same is not exempted in respect of leave encashment.
It was determined by the tribunal that the The assessee was initially appointed on 28.11.1983 in the Department of Indian Post and Telegraphs .
Therefore, he was initially appointed in the Central Government which was affirmed in the certificate from the Accounts Officer of BSNL on 18.01.2023 that the leave encashment for 300 earned leave was of Department of Telecommunication originally that of Indian Post and Telegraph Department and the same could not be treated as a PSU and the assessee is entitled for exemption under Section 10(10AA) of the Income Tax Act.
The tribunal after reviewing the facts and submissions of the both parties, the single member bench of Suchitra Kamble, ( Judicial Member) allowed the appeal filed by the assessee
Thus the bench decided the issue in favour of the assessee. .
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